An economist is someone who didn't have enough personality to become an accountant.

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Money is like manure. If you spread it around it does a lot of good. But if you pile it up in one place it stinks like hell. - Jr Murchison

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Tax Time Tips

Even though there is only one month until tax time it is still possible to pay less tax by doing a few simple things.

Salary sacrifice can be a great way to reduce your tax. If you are expecting an end of year bonus from your employer you could negotiate for it to be Salary Sacrificed into your super account. Salary sacrifice means all contributions are taken from your wages before tax. This in turn reduces your income and you’ll pay less tax as well.

Also, if your partner earns less than $34,488 a year, the government will pay a co contribution of 50c in every dollar contributed up to a maximum of $500.00. This is for after tax contributions from a spouse or partner. If you contributed $1000 to your partners super account the government will pay a rebate up to $500 maximum. What a great way to get $500 for free!

You can also claim the spouse super contributions tax offset but this is only for non working or low paid spouses. You can receive an 18% tax offset in your tax return (maximum of $540) if you contribute to their super and if they earn less than $10,800. The benefit reduces and cuts off altogether once the spouse earns $13,800.


Pre pay interest


If you have a loan for business purposes or perhaps investment property loans, you can prepay the interest for the year and claim an instant tax deduction. Of course, you need the spare cash, to be able to do this.

If you have investment property loans and you haven’t the spare cash to prepay interest you can also apply to the ATO for a PAYG income tax withholding variation. The link I have just added is for the online application of this variation form but you need to be very prepared before you start this process. The ATO will ask many questions such as dependants, income, tax file number, (ABN if you have one) all expenses for properties (rates, body corp etc) and many other questions. Have last years tax return with you, all your receipts, payslips etc and a cup of coffee. It may take you an hour or so but it will be well worth it. Instead of paying all these expenses through the year and then claiming them as a tax deduction at the end if year, this form allows the ATO to predict your deductions and take them out weekly, in advance. Say you’re due for a $5000 refund at the end of the year. After the calculations, they’ll divide the $5000 by 52 weeks and you’ll end up with $96.15 more in your wage packet each week. That’s why you have to be accurate though. Get the calculations wrong and you may end up having to pay some money to the ATO. I’ve done it before though and it’s reasonably straight forward.


Work Expenses


Make sure you claim all expenses related to your job. Many things can be claimed as long as they are work related. Subscriptions, mobile phone costs, calculators, work boots, brief cases can be claimed without receipts if they are under $300 each. If you travel with work you may be able to claim air fairs, accommodation and meal expenses if staying overnight. You can also claim the fees paid to your accountant or tax agent for preparing your tax return.


Sell none performing assets


If you have some shares or other assets that are performing poorly you can sell them at a loss and claim them against any other income you make in that year. This will reduce any Capital Gains tax payable for that period. All capital losses are able to be accumulated going forward but you cannot claim a capital loss retrospectively (from previous period).


There’s a few tips for trying to reduce your tax at the end of the year. If you have any other ideas, please add a comment below.


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