5 Top Tips to Reduce Your Taxable Income
No matter how our values may align, one thing that unites and binds just about all of us is a desire to reduce our taxable income. It’s quite clear that death and taxes are the only certainties one can expect in life, but steps can be taken to minimise how much our tax burden ends up being every year. Importantly, it must be stressed that the following post contains legal tips on reducing taxable income, so no funny business!
01. Claim as Many Deductions as Possible
One of the best ways to reduce your tax burden is to keep all receipts for anything related to your income. This category can be pretty broad, but consider everything from printer & photocopier paper to laptops and new phones, for example. If you use anything in order to generate your income, chances are it can be claimed as a tax deduction provided you’ve kept the receipt.
If you’re unsure of your possible deductions, hand over your receipts to your tax agent and they’ll be able to give you a better impression of how much you can claim.
02. Donate to Charitable Organisations
If you’re feeling sincerely charitable and act on that feeling, you’re doing your community a favour but also doing yourself a favour come tax time. In Australia, donations made to charitable organisations from as little as $2 can be claimed against your tax burden.
Keep in mind that you’ll need to keep receipts of your donations. These should be sent to you when you make the donation, but do ensure that you’re given one. Moreover, charitable donations aren’t refunded to you at tax time but rather a percentage will be deducted from your total tax burden.
03. Switch to Private Healthcare
A clever and sensible tip used mostly by high-income individuals is to switch to private healthcare. While everyone needs to pay their 2 per cent Medicare Levy, individuals earning over $90,000 per annum (or $180,000 per family) must pay an additional 1 per cent.
It might seem negligible, but basic private healthcare can be accessed for less than this one per cent figure. In addition to paying fewer taxes, you may also have access to much shorter queues for appointments with private healthcare providers.
04. Lodge On-Time Every Year
This may seem obvious, but it’s nevertheless important to stress this point. Lodge and pay your taxes on time every year. Generally, everyone must lodge before 31 October, but individuals using a reputable tax agent (and not currently in a dispute with ATO) can file in May of the following financial year.
Failure to pay on time can result in delays, headaches, and penalties, so always try to pay on time to avoid these.
05. Use a Reputable Tax Accountant
Lodging your own income taxes can range from relatively simple to highly complex, depending on a wide range of factors. Any miscalculations, delays, or errors can cause delays, audits, penalties, or even have you pay significantly more than you should be paying.
For these reasons, it is highly recommended that you consult a qualified team of tax agents that can lodge on your behalf.
Badawy Large & Powers
Choose Badawy Large & Powers for quick and efficient tax filing with no hassle and minimal delays.