Tax Returns

How to pay less tax this financial year

By December 13, 2019 No Comments
pay less tax
Income tax in Australia is paid on the money you earn through income such as wages, Government payments, rent and dividends. You can help reduce the amount of tax you pay on your income earned by claiming all your eligible deductions as long as there is a nexus – directly relate to earning your income.

1.    Record Keeping

The key to claiming is to capture all your work-related transactions so you can include all your eligible tax-deductible expenses at tax-time. This means you need to keep on top of your record keeping. Spend less time gathering your tax affairs for processing when end of financial year arrives by staying on track throughout the year by making regular adjustments and updates to your records.

 

2.    It pays to be charitable

Every dollar over $2 donated to a registered Deductible Gift Recipient (DGR) charity is tax deductible. So not only does donating help those less-fortunate but it also helps your tax bill come tax time! Make sure you keep your receipts and emails in one place so you can add up all your good work come tax season.

 

3.    Specialist advice

It pays to use a specialised tax agent like Ezytaxback as we are experts in the field, we can not only save you time getting your tax affair in order but we can also improve your tax result. You may even have a complicated tax matter that you need us advice on, such as foreign income from your Apple Inc. shares!
We are specialists and to stay certified we are constantly improving our knowledge and staying up to date with changes in the tax industry. We have helpful tips and tricks which you may be unaware of which will increase your refund or lower your net payable result. Along with specialist brains our eyes are trained to spot any mistakes you may enter and correct them for you prior to lodgement with the ATO.
The best part is, our online tax service is one of the cheapest on the market, making affordable specialist tax advice affordable to all Australians.

4.    Is it time to take out private health cover?

If you earn over $90,000 as a single or over $180,000 in combined family  income and are not covered with full 365 private patient hospital insurance cover you will pay the Medicare Levy Surcharge MLS tax. This tax is an extra 1%, 1.25% or 1.5% tax payable on your taxable income on top of the Medicare Levy tax, which is levied depending on your taxable income earned.
So for example, if you earn $120,000 for the 2019 financial year as an individual and you do not have an appropriate level of private patient hospital cover, you will pay an extra $1,200 on your taxes. Whereas you can take out an average full hospital cover including some basic extras like dental and optical for roughly $80 per month which equals to $960 in spending for the year and you will still be saving yourself $240 in the meantime.

5.    Negative Gearing

You can lower your taxable income through owning a rental property where the costs of managing and maintaining along with interest paid on the home loan exceeds the rental income earned, through what is known as negative gearing.  There are a lot of expenses along with interest paid which you can claim to offset your rental income such as depreciation of building, furniture and fittings, repairs and maintenance costs and even advertising for tenants.

This method of negatively gearing properties is a strategy used by many with the hope of when the time comes to sell up, the capital gain from sale and the tax savings generated will outweigh the losses accrued during the time of ownership.

6.    Personal Super contributions

The Australian Government encourages individuals to save for retirement through contributions to Superfunds by way of tax incentives. There are two types of contributions individuals can make which can both have their own tax saving benefits:
–       Concessional, which are contributions made from your before-tax income
–       Non-concessional, which are contributions made from after-tax income
Individuals are eligible to claim a tax deduction for voluntary personal super contributions that are made to a chosen super fund from after-tax income (non-concessional) which means you pay less tax come tax time! But is important to be aware of the $100,000 deductible cap (2018-2019 rates) and restrictions depending on your personal circumstances.
Along with the non-concessional tax benefits, concessional contributions made to superfunds are taxed at a lower tax rate of 15%, which is less than any of the marginal tax rates applied to individuals which equals great tax savings. Although this rate is capped at $25,000 with the amount of tax rate increasing for contributions above this amount and once you earn over $250,000 your rate also changes to 30%.
If you have any questions regarding the information above or want some more tax tips on how to lower your tax bill or increase your tax refund, get in touch with Ashley our customer service guru who will be able to lead you on the path to tax savings – get in touch.

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