Are you paying too much tax?
No one likes paying tax, so why are most Australians paying more tax than they need to?
Without a working knowledge of the latest Australian tax laws, you could be paying more tax than what you need to. Thousands of Australians miss out every year on deductions they were entitled to claim without realising. At National Wealth Advisory, we connect individuals and businesses with the financial professionals they need to help minimise their tax liability.
Accurate tax planning will help ensure you’re not overpaying taxes. Not all financial experts and taxation accountants are created equal. For this reason, National Wealth Advisory has curated an Australian wide network of trusted certified advisors that we can introduce you to based on your needs and circumstances.
If you haven’t had a strategy meeting with one of our team members yet, this article highlights some simple steps you can take in the meantime to ensure you’re not overpaying tax. With the extra money you get back, a whole world of possibilities awaits you—redirect it to your mortgage, property investments, top up your super fund, maybe even a long-awaited family holiday exploring the top end of Australia.
How to pay less tax?
Keep accurate records
If you want to claim tax deductions, you’re going to need to be able to prove claims using receipts and record keeping. Without them, you could be missing out on valuable deductions and the cashed-up tax return you were hoping to for—simply due to lack of proof. It’s easy to fall into the habit of shoving receipts into a drawer until tax time and then spend weeks sifting through them, trying to recall what you spent and where. Set aside time once a week to update your work-related travel expenses, logbooks and file your receipts.
Claim on Donations
Every time you make a donation of more than $2 to a registered charity, it can be claimed as a tax deduction, providing you get a receipt and you voluntarily transfer the money (or property) without receiving any material benefit or advantage. For example; a donation of $100 to the Cancer Council is tax-deductible, but a donation to a GoFundMe campaign (even though they provide their money to charitable causes) is not tax-deductible. It’s easy to forget to ask for a receipt, but it can be well worth your while for larger charity donations.
Use Salary Sacrificing
You can reduce the amount of tax you pay by taking advantage of salary sacrificing. This can sometimes be called a remuneration or salary package. The way salary sacrifice works is that you strike an agreement with your employer to forgo part of your gross pay in exchange for a perk (known as a fringe benefit). For example; you could use salary sacrificing to pay off a new car, pay your rent/mortgage or top up your super fund. You receive less on payday, but you also pay less tax. It’s important to get any salary sacrificing package looked over by a tax expert to ensure it’s structured correctly to avoid Fringe Benefit Taxes (FBT).
Super contributions on behalf of your spouse
Did you know that if you have made super contributions to an eligible super fund on behalf of your spouse, you may be eligible for tax deductions? Whether you’re married or de facto, according to the ATO, tax offsets of up to $540 per year are available for individuals who made contributions to low-income spouses’ super. Providing you meet the age requirements, assessable income cut-offs and you were living together at the time of payments. you could be eligible.
Private Health Insurance can reduce your medicare tax levy
Those who don’t have private health insurance may be subject to a Medicare levy surcharge on top of the compulsory 2% portion of the Medicare tax that applies to most other Australian residents for tax purposes. The medicare surcharge applies to singles who earn more than $90,000 and $180,000 for families.
Set up an SMSF
There are many advantages to having Self-Managed Super Funds. They are generally taxed at the concessional tax rate of 15%, and a taxation expert can help you structure your fund to minimise the amount of tax you pay. If you are retired with an SMSF and receiving an income stream, you may be eligible for further tax reductions (Exempt Current Pension Income).
Call National Wealth Advisory today and we can discuss your circumstances, then we will recommend and connect you with trusted certified professionals from our Australia-wide network.