A common equalizer is the inevitability of having to pay taxes. While we all have to pay the tax man, there are certain tips for reducing your personal tax amount and making the most out of your earnings. From superannuation contributions to managing your debt, the following tips are safe and simple techniques for securing a marginal tax rate.
Superannuation Contributions
One of the simplest and fastest ways to reduce individual income tax rates is to make contributions to superannuation. This is a form of salary sacrificing that replaces the income tax rate that would have been paid on personal earnings with the lesser superannuation contributions tax; for most people, this is 15 percent.
Managing Your Debt
When it comes to mortgages on investment properties, these interest costs are deductible debt. What that means is that investment expenses and interest costs are a good tax offset that can be claimed to reduce income taxes paid.
Reduce Capital Gains
The higher your capital gains, the more taxes you will pay. If you have investments like shares that are not performing well, sell them off so your capital gains are reduced.
Claim all Relevant Work Deductions
All legitimate work-related deductions should be claimed on your personal tax return. While taxpayers are permitted to make up to $300 in work-related expenses without receipts, it is still recommended to keep receipts for thorough documentation. The tax office is paying special attention to abnormally high work-related deductions this tax year, so make sure all claims are legitimate to avoid penalties.
Spousal Contributions
An additional tax bill saving tip is to make an after-tax contribution to your lower-earning spouse. This tax offset can be significant as it reduces the taxes owed by the higher-earning spouse, while keeping the funds accessible.
Keep those AUDs in your wallet with these simple, legal, and effective tax-reducing tips. Having a solid plan in place throughout the tax year can ensure you are taking advantage of all tax breaks you can, especially in terms of contributing to superannuation, lower-earning spouses, reducing capital gains, and managing your debt.
Frequently Asked Questions
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Is getting a tax accountant worthwhile?
Yes, getting a tax accountant can be very worthwhile. A tax accountant can help you to understand the tax requirements for your particular situation, provide advice on how to legally minimise your tax liabilities, and advise you on the best strategies for managing your taxes. They can also help you to prepare and lodge your tax return, ensuring that you receive all of the deductions and credits that you are entitled to.
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What is the difference between an accountant and a tax accountant?
An accountant is a professional who provides financial advice, manages financial records, prepares financial reports and performs other related duties.
A tax accountant is a professional who specialises in taxation and is responsible for preparing, completing and filing tax returns for individuals and businesses. Tax accountants may also provide advice on tax minimisation strategies and other tax-related matters.
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How much does it cost to do a tax return?
The cost of a tax return through a tax accountant in Australia can vary greatly depending on the complexity of the return and the qualifications of the accountant. Typical costs range from $100 to $500 or more. This includes both the preparation of the return and the lodgement of your return with the Australian Taxation Office (ATO).
For a comprehensive quote, it is best to contact Perth Tax People directly. We will be able to provide you with an up-to-date cost estimate based on your individual circumstances.
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Is it easy to do a tax return yourself?
Yes, it is possible to do a tax return yourself in Australia. The Australian Taxation Office (ATO) provides a range of online tools and guides to help you complete your own tax return.
However, if you are unsure about anything, it is recommended that you seek advice from Perth Tax People. We can help you with your tax return and make sure that you get the best possible outcome.
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How do I choose a personal tax accountant?
The most important qualities to look out for in a personal tax accountant in Australia are qualifications, experience and fees.
You can research the qualifications of the accountant by visiting their website or contacting the relevant professional body, such as the Chartered Accountants Australia and New Zealand (CAANZ).
It is also essential to check the accountant’s experience in dealing with personal tax matters. The fees charged by the accountant should also be taken into account and compared with other professionals in the field.
Finally, it is vital to find out if the accountant is accredited with the Tax Practitioners Board (TPB) and who they have worked with in the past.
