Everyone wants to know how to minimise tax, so you’ll be pleased to know that tax reduction isn’t as hard as it might first seem. There are several ways to reduce taxes, it’s just a matter of incorporating some simple techniques into your daily routines. These include:
Keep Good Records
Good tax records are the secret to many tax reductions. If you have an organised tax system it will make completing your tax return far easier for everyone. You can then work with your tax agent to claim everything you’re entitled to and you have the peace-of-mind in knowing that if the ATO does come knocking you have all the evidence you need to satisfy their queries.
Modern technology makes keeping good tax records very easy—these days, you can even take photos of all your receipts and store copies of electronic invoices and bills online. You don’t have to keep a shoebox full of receipts. Explore using a suitable storage app if you have a lot of receipts and invoices to save.
Claim Every Cent to Which You’re Entitled
When you’re sorting through your possible tax deductions, make sure you include or ask questions about absolutely everything that is related to your income-generating activities. For example, if you purchased a laptop that you use at home and at work you are entitled to claim a percentage of the cost of the laptop based on how much you use it at work. Just remember to keep receipts and keep some records of how often you’ve used it for work purposes.
A Charitable Spirit is Handy Come Tax Time
Donations over $2 that you make to a registered charity are tax deductible. The entire sum of your donations is deducted from your taxable income. So, not only can you help make a positive impact for your charity of choice, you can also minimise your tax. Again, just make sure you get a receipt form the charity after you’ve made the donation.
Get Private Health Insurance
Many higher income earners are required to pay a the extra Medicare Surcharge in addition to the standard medicare because they do not have private hospital cover. Assess your situation with your tax agent to determine the possible benefits of taking out private health insurance.
Do You Work from Home?
As employment becomes more flexible, many of us are choosing to work from home rather than schlepping into the office every day. If you work from home for even a percentage of your working week, make sure you keep a diary of the hours you spend working at home. This way, you can claim the ATO approved $0.52 per hour which covers power, as well as claiming other business related expenses such as office furniture and equipment costs, stationery, and internet and phone costs. You’ll be surprised at how much you save by including home office deductions.
Are You Studying?
If you’re undertaking study related to your current employment that is designed to improve your skills and result in an increase in income within your current employment, you can claim eligible self education expenses as a tax deduction based on the costs you incur while undertaking that study. That means you need to keep records and receipts on things like course fees, books, and so on.
Don’t Rely Only on the ATO’s Data
With the click of a button, you can pre-fill some of the income information in your tax return from the ATO’s database. Unfortunately, most people assume that because this information comes straight from the ATO, it must be right. It isn’t always. Be sure to cross-reference the ATO’s data with your own, such as payment summaries from your employers. This is particularly important if you’re looking to lodge your tax return as soon as the new tax year rolls around—sometimes the ATO’s database is not updated until early to mid-August.
Invest in the Services of a Good Tax Agent
Experts will always be able to find deductions that you have missed. Doing it yourself is free on the ATO site but statistics show that taxpayers who utilise the services of a tax agent tend to receive improved refunds in excess of the fee paid. In addition the fee itself is also tax deductible. With online tax services available there’s no excuse for not getting a professional on your team.