We asked our top accountants for the 10 easiest ways that you can pay less tax to the government and keep more of the money you earn. They had a lot of answers. (And they are all legal!)
The simple tips on this page will help ensure you pay less tax in the coming year
Here’s the first part of our two-part article that could help you save big $$$ in the upcoming tax season.
1. Keep Good Tax Records (with the right method, it is very easy)
Tax deduction claims need to be paired with receipts that you can show to the ATO. Keeping track of those receipts is the law, but it’s also the best way for you to remember everything that you can claim later on.
Keeping good records is the #1 way to make sure you claim every expense you are entitled to (and help ensure your tax process runs smoothly). Get organised—it’s easy!
Record-keeping shouldn’t be a headache for you. Just take 5 minutes each week to put your receipts into a folder (or save them online) and update your logbooks. We guarantee it will save a lot of pain and anguish at the end of financial year—and it’ll help you pay less tax!
Here are two simple tools that make it easy to save and claim your tax-deductible receipts:
- How to organise your tax receipts and boost your tax refund
- The Etax mobile app makes it easy to save receipts, using your mobile phone camera.
2. Be Charitable
Did you know that every donation over $2 you make to a registered charity is tax deductible? After you make any donation you should be given a receipt. At tax time, add up the donation receipts and you can claim it as a tax deduction for the preceding financial year. Basically, some of the money you donate to good causes enables you to pay less tax.
- Remember: Keep your receipts in a folder. Later, when you’re ready to do your tax return, you’ll be able to find them and claim some extra deductions that will help you pay less tax.
- Another thing about donations we should clear up: Your donations don’t come straight back onto your tax refund. They are subtracted from your taxable income, which means you get a percentage back (depending on your income and taxation rate).
3. Claim what you are entitled to claim
Claiming work-related expenses like transportation is a very good way to increase your tax refund and pay less tax.
Claiming deductions is one of the best tools in reducing your overall tax payable. If you have to spend money during the year and it relates to earning your income, then keep the receipt and make sure you claim a deduction for what you are entitled to. Even if you use the item for part work and part personal, you can still to claim an apportioned deduction.
If you are not sure whether you can claim a particular item, keep the receipt and ask us later, when you prepare your next tax return. It is better to keep a receipt and not claim it, than to throw it out and find out you could have included it on your return!
4. Seek the Advice of Tax Professionals
In most cases using a tax agent or accountant can not only save you a lot of time, but will also improve your tax refund or net payable. This is why the ATO’s statistics show 70% of Australians use a tax agent’s service – like Etax.com.au!
At Etax we are experts in tax and we have up-to-date and in-depth knowledge of tax laws and changes. We may find you are entitled to deductions you were unaware of or even an offset you didn’t know existed. Quite often our people spot and correct little mistakes that could slow down a taxpayer’s refund or, worse, that could cause an ATO reassessment or audit later on. And the best part is; the cost of the Etax online return is very low and can be claimed as a deduction on next year’s tax return.
A tax agent’s job is to help you steer clear of ATO problems and to help you pay less tax.
5. Medicare Levy Surcharge
If you do not hold a private insurance policy, as soon as your income exceeds $90 000 for singles or $180 000 for families, you will be required to pay a minimum of 1% extra in the form of the Medicare Levy Surcharge. This is on top of the compulsory 2.0% Medicare levy paid by most Australian taxpayers.
Often the cost of taking out private health insurance will cost less than the 1% of your gross income you will be required to pay when completing your tax return.