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April 6

The 10 Easiest Ways to Ensure You Pay Less Tax: Part 1

Posted by on April 6, 2016 at 8:44 AM

Tax is a legality and we must all pay it, but like all laws there are ways in which you can use the system to create a more favourable outcome for yourself. This is what professional lawyers do all day so why shouldn’t we, the Australian people also learn a few tricks of the trade to help our cause as well?

The 10 Easiest Ways to Ensure You Pay Less Tax: Part 1

The top 10 accountancy firms in Australia provided the following pieces of information about how to pay less tax to the Australian government legally. Retain more of the money you earn by legally biding by the Australian tax laws to save yourself extra cash and add more value to every hour of the day that you work.

 

Tax Tip 1: Good Tax Records

The 10 Easiest Ways to Ensure You Pay Less Tax: Part 1When making tax deductions you need to have that expense paired with a receipt to show it to the Australian Tax Office (ATO). It is a legal requirement that you keep a good record of all expenses that you are claiming for, plus it’s the most efficient way to keep track of everything that you can claim for at later date. Keeping accurate records is the number one way to make sure you claim every expense that you are entitled to. On top of this it also helps you ensure your tax process runs as smoothly as possible.

Tax record keeping shouldn’t be time consuming or difficult either, simply put aside 5 minutes each week to put your receipts into a folder or save them online to update your logbook. It may seem like a hassle now, but when it comes to the end of the year it will make the process seamless and help you pay less tax.

 

Tax Tip 2: Charity

The 10 Easiest Ways to Ensure You Pay Less Tax: Part 1This is something that I wasn’t aware of before which I think you will find very interesting: every donation over $2 made to a registered charity is tax deductible. Whenever you make a donation you should receive a receipt and again this should be added to your log. When it comes to tax declaration time, you can claim all of those receipts as a tax deduction for the preceding financial year. In other words some of that money you donate to a good cause enables you to pay less tax.

Note: The donations you make to charity do not come straight back onto your tax refund. They are actually subtracted from your taxable income which actually translates to a percentage that you get back, depending on your gross income and taxation rate.

 

Tax Tip 3: Claim what you are Entitled to

Deductions are one of the best ways to reduce your overall tax payables and using them to their fullest potential is the single most powerful way to save money. Any money spent during the year that goes towards you earning your income can be deducted, so (once again) be sure to keep your receipts. Even products that you use part of the time for work and part of the time for personal use can be claimed at apportioned rates.

This subject is a grey area therefore if you are unsure on what can and can’t be claimed against, then have a look at my previous post on the most under-claimed tax deductions.

 

Tax Tip 4: Seek Tax Professional Advice

Tax accountants may seem like an unnecessary cost tom some, but they do offer benefits to making your life easier and potentially saving you a lot of time and in certain instances money too. The small cost of their time in relation to what you are claiming for, can be a great money saver and this is why the ATO’s statistics show 70% of Australians use a tax agent service such as Etax.com.au

 

Tax Tip 5: Medicare Levy’s

The 10 Easiest Ways to Ensure You Pay Less Tax: Part 1If you do not hold personal health insurance then as soon as your income exceeds $90,000 for singles or $180,000 for families, you are required by law to pay a minimum of 1% extra in the form of Medicare Levy Surcharges. This is an additional 1% on top of the 2% you are already paying. It’s a good idea to take out a health care policy because the cost of one is likely to be less than 1% of your total income when completing your tax return.


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