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.
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.
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.