Everyone hates paying taxes, but most businesses are paying more than they need to. With that in mind, here are 10 super easy tips to help you cut down on your tax bills.
Make Sure You Keep Good Tax Records
You need receipts if you want your money back from the tax office, it’s estimated that the ATO keeps millions of dollars each year, that should be refunded, because of poor record keeping. You can use a mobile app such as myDeductions to make documenting your receipts easy.
Charity Is A Good Deal
If you give more than $2 to charity each year, you can claim some of it back on your tax return. You don’t get everything back, but you do get a percentage back. That means each time you donate, you’re doing two good deeds!
Claim Every Tax Deduction That You Can
Every time you spend money that’s related to how you “earn your income”, you’re entitled to get some of it back (with some exceptions). Even when you buy stuff that’s partly for personal use and partly for business use, you can get the work-related expense portion deducted. You may need to talk to your accountant about what qualifies, but it’s a good idea to keep every receipt you get and then file stuff you’re not sure about as “ask our accountant” rather than miss out.
Consider Private Health Insurance
Yes, this sounds daft but it’s not. You may find yourself paying the Medicare levy surcharge and if so, it can work out cheaper to take out private healthcare coverage rather than pay this surcharge. You need to get professional advice regarding this, but it can be a good deal.
Learn To Time Your Expenses
If you have large expenses to be made, you may be able to choose which financial year you make the expense in and thus, you can affect your tax bracket in a year where you’re in a higher bracket than normal and delaying an expense in a year where you’re not earning much is also a good idea.
Some investments bring tax breaks, such as negatively gearing an investment property. However, we should note that you should get professional advice around investments (including from your accountant) because saving a few bucks on tax is no use if the value of your investment drops like a stone.
Paying Off Your Mortgage Can Cut Your Tax Bill
This sounds odd but it’s true. Essentially, if you’re keeping savings in a savings account, the interest is taxable. If instead, you pay those savings off a mortgage offset account – they are not. This offsets your mortgage balance and reduces the interest you pay on it, cuts your tax bill and you can withdraw any funds paid if you need them.
Optimise Your Taxes With Your Partner
Talk to your accountant about this, but it’s often possible for a couple to structure their tax affairs differently to optimise the tax benefits they receive.
Time The Sale Of Assets Properly
If an asset sale may incur capital gains tax, then you may want to consider the timing of the sale. Individuals receive a 50% capital gain discount if they’ve owned the property for more than 12 months, for example.
This is another good topic to discuss with an accountant.
Final Thoughts On Saving On Your Taxes
The good news is that all these steps are legal, ethical and moral. Everyone should pay the taxes they owe; you just owe it to yourself to make that number as low as you can. So, why not try out these ideas, today and get saving?