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10 ways to reduce your tax bill
With the tax return deadline only one month away, these tips could help minimise your tax bill.
10 ways to reduce your tax bill
With the tax return deadline only one month away, these tips could help minimise your tax bill.
The 31 October deadline for tax return self-lodgement is fast approaching, and you may be wondering if there is anything you can do to reduce your tax liabilities for the 2020–21 financial year.
Platinum Accounting Australia managing director Coco Hou has put together a list of her top 10 tips to consider now and in the future.
“Whether you are an individual, side-gigger, solopreneur, business owner, freelancer, start-up or larger business, there are some key things that you should do prepare yourself for tax time that will help to reduce the amount of money you have to hand over to the ATO come tax time,” Ms Hou said.
Record your work-related expenses
Ms Hou said that individuals need to “be ruthless” and keep track of all work-related expenses throughout the year, making sure to keep hold of receipts.
“Take photos of your receipts using apps like Hubdoc that integrate with cloud-based accounting systems such as Xero. These apps convert your receipts into data that is then uploaded straight into your accounting system,” suggested Ms Hou.
Make tax-deductible donations
You can show your support for a cause by making a tax-deductible donation to a charitable organisation.
“For a donation to be tax-deductible, it must be made to an organisation endorsed as a Deductible Gift Recipient (DGR) and must be a genuine gift,” Ms Hou said.
Make extra contributions to your super
Additional payments can be made to your superannuation that will be taxed at 15 per cent. However, Ms Hou said individuals should take note of the cap on concessional contributions that is currently set at $27,500 per financial year.
Claim investment expenses
“Remember to claim investment expenses and your investment loss from the prior year, as this can be carried forward to offset future gain,” she noted.
Use a quantity surveyor
By using a quantity surveyor to prepare a depreciation schedule for your rental property, you can ensure depreciation is captured and included in your tax return.
“A tax depreciation schedule is 100 per cent tax-deductible. This means you can claim the fee charged by the quantity surveyor as part of your tax return.”
Pay interest on time
Ms Hou also highlighted the importance of ensuring loan repayments are made on time.
Utilise the capital gains discount
The 50 per cent discount on capital gains can be used for assets you have held for at least one year, including cryptocurrencies.
“For people who invest in crypto, if you’ve had the crypto for more than 12 months, you may be eligible to discount your capital gain by 50 per cent,” she said.
Structure your assets
Individuals should explore the use of different structures, such as a family trust, to better manage their assets and distribution of income.
Hold private health insurance
“Having private health insurance coverage means you avoid having to pay the Medicare levy surcharge,” she said.
Tax-plan with your accountant
“Maintain communication with your accountant and ensure you undertake a tax planning session once a year. This will help you to plan for the future and ensure that you have identified all the opportunities to minimise your tax bill at the end of the year,” concluded Ms Hou.
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