What You Need to do to Pay Less Tax

What You Need to do to Pay Less Tax

Looking to pay less tax and make end of financial year accounting less stressful?


Effective tax planning can help employees, sole traders, business owners and investors better manage their taxes throughout the year, make the returns process smother and help maximise returns.


Here are smart ways to pay less tax and put more money back in your pocket.


Consider Salary Packaging


If you’re a part or full-time employee or a business owner, salary packaging is one of the smartest ways to reduce tax.


The ATO-approved agreement enables you to pay for everyday expenses with pre-tax salary. This reduces your taxable income and increases your take-home pay. Find out how to get started here.


Some expenses you can salary package include:


  • Rent or mortgage payments
  • Utility bills
  • Car loan
  • School, childcare or university fees
  • Health insurance
  • Superannuation
  • Personal expenses
  • Computer software and laptops


To know if salary packaging is an option, ask your employer. For business owners there are also some benefits, such as attracting and retaining employees. It’s also used as an incentive to increase productivity, but admin costs need to be budgeted for.


Add to Your Super


Superannuation offers tax benefits to boost retirement savings.


Employers are only required to pay 9.5% of your earnings into super in Australia. At retirement, having used only the minimum contribution rate, your Super savings may be too low to support your preferred lifestyle if you’re not contributing more along the way.


Whilst it’s often seen as a ‘rich person tactic’ to pay less tax, all levels of income earners can benefit from this strategy.


To take advantage, make sure you:


  • Make payment(s) by June 30th and notify your super fund before lodging your tax return
  • Are 75 years or under; if you’re aged 65-74, you’ll also need to pass the work test to claim
  • Don’t exceed $25,000, which is what pre-tax contributions are capped at each year
  • Give your TFN (Tax File Number) to your super fund to avoid paying more tax on super


Tip: Higher earning spouses can reduce their tax by contributing some of their super to their spouse’s super on behalf of their non-working, or low-income earning partner. The tax offset it up to 18% on super contributions of up to $3,000.


Double-Check Old Returns


Found an old receipt you need to claim back?


Previous tax returns could provide benefits if deductions or credits weren’t included.


Once they’re paid out, check to see if you’ve missed anything. If it’s been less than three years since you filled it, file an amended return to claim more from that tax break.


Make sure to keep receipts or proof though. Amended tax returns invite the ATO to take a closer look and may raise red flags with tax auditors.


Invest in Health Insurance


Paying for private hospital cover and health insurance saves most Australians tax money.


The Australian government has designed a system that encourages private health cover. Without it, as your income increases, the amount you pay in extra taxes grows quickly. Often investing in private cover is cheaper than paying that tax surcharge each year.


If your income is $90,000+ for singles or $180,000+ for families and you don’t have cover, you’ll pay an additional minimum 1% Medicare levy surcharge. That’s on top of the already-compulsory 2% Medicare levy.


However, the government rewards those with private health insurance and allows you to claim a rebate or tax offset.


Action Plan


  • Know the current Australian tax brackets and rates
  • Practice good tax planning and record everything
  • Claim all legitimate work-related expenses and deductions. But be wary the ATO targets these expenses and may need proof of your claim if you’re audited
  • Reduce your tax bill by salary packaging your pay
  • Contribute to superannuation
  • The deadline for tax returns is October 31st, unless you’re registered with a tax agent


Take the stress out of tax time, start implementing these strategies today to pay less tax.


 

About the Author


Jayde WalkerFounder of Toward Music, Jayde Ferguson Walker is a music enthusiast and scripturient with a consuming passion to write. With 15+ years’ experience in the local music industry as a music journalist, Jayde also writes in the business, travel and home improvement industries. You can catch her on LinkedIn.


1 Star2 Stars3 Stars4 Stars5 Stars (No Ratings Yet)
Loading...

Leave a Reply

Your email address will not be published. Required fields are marked *

Top Rated Articles

How your company can adapt to the Digital Revolution

Over the last couple of years, technological innovation has brought about a rapid change in the customer service landsca

LEARN MORE

Will Marketing Automation Help Your Business Grow?

Marketing automation software can benefit your business in a number of ways. It is a great way to increase traffic, enco

LEARN MORE

How CRM Can Maximize Customer Lifetime Value (CLV)

"Keep your customers always on the frontline," this is a key philosophy to running a successful business. Customers are

LEARN MORE

Recently Viewed

How to Use Social Data to Launch a Successful Marketing Campaign

Social media is a goldmine for marketing specialists. There’s no other tool like social media that can help business o

LEARN MORE

The Top 10 Business Parks in Sydney

Sydney is Australia’s corporate capital and holding any kind of business event, either national or international, li

LEARN MORE

3 Tips to Motivate your Employees

Every business owner knows that without the right employees they wouldn’t be able to sustain their business grow a suc

LEARN MORE
  • Over the past 6 months the incredible team at MMP have supported us to shift our attitude towards our business & month on month our revenue is increasing to the point we will be able to employ additional staff to support our business goals long into the future. Do not regret our decision one single bit!

    • Emma Reece

  • Working with my coach has enabled me to see the areas where my business is failing. This was pretty confronting to me to be honest. MMP has the tools to improve these areas and the guidance on how to implement them.

    • Sharon Robinson

  • I have been working with Max My Profit for approx 3 years now, and over that time I have learnt a lot of things about not only what it takes to run a business, but I have also learnt things about myself. I don't believe i'd be the person or have the business I have today if it wasn't for Max My Profit and our Business Excelerator. Great team to work with if you want to take your business serious!

    • Ben Choy

  • As a new client for Max My Profit (MMP) it has taken no time at all to realise the benefits of business coaching. Despite many years of senior management experience starting a new business requires best practice systems and processes built on a solid platform of detailed planning. I look forward to the benefits of adopting the formula being shared by MMP.

    • Campbell MacLeod

  • Max My Profit Are truly awesome at what they do. They have helped me over the past 12 months to get off the tools in my business and start working on my business. I am looking forward to 2019 with enthusiasm not concern. Thanks so much.

    • Aaron Kemp

  • If you are committed to Growth the Max My Profit Team has the tools and expertise to excelerate all areas of your life. They Care, They Listen, They Understand You as an Individual first then they focus on Your business. Thank you Max My Profit my rating is a 6/5 - Kindest Regards The Mr Handyfix Team

    • Catherine Kavadas

  • The team at Max My Profit are an absolute pleasure to deal with. I love working with a team who is on top of what they are doing and have a clear view of what they are working on with you and helping ensure you get to the end goal.

    • Lauren Watts

  • I have been working with MaxMyProfit over the years and what they do for SME's in growing their business is fantastic. Also due to there knowledge and their supporting material for companies across the 5 lifestyle stages and assisting them through this process day in day out is extremely comforting as a small business owner and have referred them many businesses over the years.

    • Steve Laingy

  • Working with a business coach from MaxMyProfit has been one of the best things I have done for my business. I had several other coaches before MaxMyProfit but these guys are a step above the others. I have seen a significant increase in sales, now have a business that can run itself and the coaching program has paid for itself many times over.

    • Matthew Kitchin

  • Much more than just business coaches. There is an absolute treasure chest of business knowledge in their members site.

    • Iain Campbell

  • Max My Profit are unique as they really partner with you to develop and implement a plan that will drive success for the business. I was hesitant to proceed as previous business coaches tell you what to do and rely on you to implement.

    • Michael de Haan

  • I attended one of Max My Profits introductory events in Melbourne. Having been an accountant for almost 30 years, I was somewhat sceptical. Boy was I wrong. I not only enjoyed the presentation, but I gleaned so much from just that session.

    • Daniel Odd

  • These guys are an absolute wealth of knowledge for Small Business. The programme and support networks they have set up ensure learn more every day and can take your business from good to great. Thanks so much.

    • John Butler