We asked our team of the top accountants for small business Melbourne to give us the ten easiest ways we could pay less government tax and keep more of our hard-earned money. They had plenty of answers and all of them were legal. This article is all about how to save big money in this upcoming tax season.
The following tips will help you save on your taxes this coming year:
(1). Keep Immaculate Tax Records (using the right method makes this very easy).
Tax deduction claims have to be paired up with your receipts so you are able to show your ATO. The law requires that you keep track of those receipts, but it is also the best method of remembering everything you're able to claim later on.
Maintaining good records is the absolute best way of making sure you claim each and every single expense that you're entitle to. It helps the whole tax process run smoother. Stay organized, it's not complicated.
Keeping records should not be a headaches for you. Spend about 5 minutes every week putting your receipts where they're easily accessed and keep them updated. We can guarantee it saves you lots of pain and headaches when tax time rolls around each year, and it also helps you to pay less tax.
(2). Be Charitable
Many people are totally unaware that for every donation they make over $2 to any registered charity, it's tax deductible. Once you make a donation to a charity they will give you a receipt. When tax time rolls around you can add these receipts up and claim the amount as a deduction for the preceding year. Basically, the money donated to a good cause will help you pay less tax.
Remember to keep all your receipts in a special folder. Later on, when you're ready to fill out your tax return, you will be able to locate them easily and claim some of those extra deduction that are going to enable you to pay less on your taxes.
We should clear this up about donations - The donations will not come directly back onto the tax refund. They're subtracted from the taxable income. That means you'll get a percentage back depending on your level of personal income as well as your taxation rate.
(3). Claim Everything You're Entitled To
You pay less tax when you claim work-related expenses. You pay less tax and increase your refund by claiming work-related expenses like transportation. Claiming deductions is a very effective way of lowering your overall payable tax. If you spend money throughout the year that's related to how you earn your income, then keep those receipts and be sure to claim deductions on what you're entitled to. On those things used partially for work and partially for personal reasons, you can still claim them as an 'apportioned' deduction.
If you aren't really sure if you can claim a specific item, still keep the receipt just in case. It's better to have receipts you can't claim than to lose receipts you can claim because you tossed them out.
(4). Get Professional Tax Advice
As a small business xero expert who is knowledgeable in small business accounting about your taxes. They can save lots of time and improve your refund. That's why the ATO statistics reveal a whopping 70% of all Australians take advantage of a tax agent service (like Etax.com).
We here are the small business accounting experts in Melb when it comes to taxes. We stay updated and have in-depth knowledge of the tax laws and any changes. We might find that you're entitled to deduction that you never knew about or maybe some offset you never knew existed. Many times our experts can spot and also correct little mistakes that can slow down a refund, or even worse, could cause an audit or reassessment by the ATO later on. The best part about Etax is the cost on an online return, it's very low and you can claim it as a deduction when next year's tax time rolls around.
(5). Medicare Levy Surcharge
If you don't own a private insurance policy, then the minute your income rises above $90,000 (singles) or $180,000 (families), you'll be required to pay the minimum of 1% extra as a Medicare Levy Surcharge. That's over and above the compulsory 2% that most Australian taxpayers pay on their Medicare Levy.
Usually the cost of having private health insurance costs less than that 1% of a taxpayer's gross income that they're required to pay when completing their tax returns.
Making investments is also a good way of reducing your taxes. However, this isn't how it works for everyone. Before investing, take the time to talk with a financial planner who can give you advice on locating the best investment for your situation. Investments should benefit you not just now but into the future as well. Just because you can save a small amount on your taxes now, if it's a poor investment you can end up losing all that original capital over the long term.
Remember, all the little deductions you can make really begin to add up over the course of the year. Always keep your receipts regardless of what you thing they'll be worth to you, then let your Etax accountant advise you on it when tax time rolls around.