Just the idea of paying taxes can be dreadful for many of us. Although paying tax is crucial and should not be avoided at all costs, wouldn’t it be better if there was a way to pay less?
Fortunately, you can reduce your taxes significantly by following the following tips. Not only are these legal, but they are practical as well.
1. Claim All the Deductions
Deductions are there for a reason, and you should use them as a taxpayer. Surprisingly, so many deductions remain unknown to many people, and thus, they end up paying more taxes.
You can claim that amount in your tax return if you have spent money to earn income. Handbags, sunscreen, laundry, subscriptions and many more can be claimed. Although you may think they cost much less, you will eventually save a lot.
Even if there is something you are not sure is deductible, ask your tax accountant to be extra sure. If you are lucky, you will retrieve a good chunk.
2. Be Charitable
If you like to spend your precious money on a good cause, there can be nothing better than donating it. What makes it even better is that a $2 or more charity is tax deductible.
After you donate your money to the tax, you get a receipt. Now you have to keep the receipt safe until tax time. However, remember that you will not receive the donation as a tax refund. Instead, you will get the money or gift in the form of a deduction, that too from your taxable income.
3. Prepay The Expenses
Prepaying is another excellent and legal way to reduce your taxable income, ultimately reducing your tax amount. As it sounds, prepaying is the amount you pay for the services in this financial year for the following year. So, if you are wondering how to save tax on salary in Australia, this tip can help you a lot.
Since you paid this amount this year, you get to claim the deduction this year. However, you must ensure that the expense is less than $1000 or meets the 12-month rule. This rule states that the prepaid expense should not exceed 12 months, nor should it stop in the middle of the financial year.
4. Contribute To Your Super or Your Spouse’s
Adding money to your super is an intelligent way of reducing the tax. Not only are you paying less tax, but you are also heading towards a stable retirement. Concessional super contributions are also taxed, but the rate is a lot lesser than the standard tax rate.
Even a person earning $45,000 has to pay 19% tax on each dollar earned above $18,200. But the tax rate for the concessional super contributions is 15%. So, consider this option if you are paying too much tax in Australia.
5. Contact A Tax Accountant
Who knows tax matters better than tax accountants? Hiring a good tax accountant will be the right choice if you want to avoid paying a single penny extra. At Clear Tax Accountants, we can help you out with any tax-related issues you might be facing.
Disclaimer: The information on this website is for general purposes only and should not be relied upon for making legal or other decisions. The advice provided in this article is general in nature and is not subject to the personal financial situation and needs of any individual. Clear Tax tries to keep the information accurate and up-to-date; however, you should bear in mind with changing circumstances, the accuracy and reliability of the information will not necessarily remain the same. The information is by no means a substitute for financial advice.
