In our daily lives, one of the most consistent processes we encounter is paying taxes.
Taxes are a necessary part of our lives, but that doesn’t mean we must pay more every time.
What if I told you there are better ways you can minimize and reduce your taxes in Australia and save some money?
Our blog post focuses on nine easy ways to pay less tax and save your hard-earned money for later use.
9 easy ways to pay less tax in Australia
1. Maximize your superannuation contributions.
One of the most effective ways to reduce your taxable income is by making additional contributions to your superannuation.
Through the ATO system, individuals are allowed to make concessional contributions to their super funds, freely lower their overall taxable income, and save for their retirement.
2. Claim work-related deductions
Most of the time, in workplaces, you may incur expenses that may be part of your work, but the good thing about it is that you may be eligible to claim a deduction.
Some of the common deductions in workplaces include uniforms and protective clothing, tools or equipment needed for work, and many others.
3. Use the low and middle-income tax offset.
Being under certain thresholds may grant you eligibility for low—and middle-income tax offsets, which are designed to provide tax relief for individuals with lower to moderate incomes.
These taxes can significantly reduce individuals’ tax bills, and it is advisable to take advantage of the opportunity if you qualify.
4. Negative gearing on investment properties
An investment property can help you offset losses such as maintenance costs against your taxable income.
This strategy is known as negative gearing, which can help reduce taxes by lowering the overall taxable income.
5. Tax-effective investments
Investing in tax-effective solutions, such as certain types of shares or managed funds, can significantly help you minimize your tax burdens.
Some investments may pay tax-efficient dividends or provide capital gains tax discounts if held for over a year.
Seek professional guidance from an investment advisor to help you find the best tax-effective strategies for your portfolio.
6. Claim depreciation on assets
This is good news if you own an investment property among other income-producing assets, as you can freely claim depreciation for them when it shows wear and tear.
You can make claims on depreciation items such as furniture, equipment and buildings, among other valuable things.
To make the process easier for you, consider hiring a quality surveyor to assess depreciation rates and help you maximize these deductions.
7. Keep records of charitable donations.
If you are a big fan of giving back to society through charity donations, you can reduce your taxable income.
Donations to registered charities in Australia are considered tax deductibles.
Ensure that you keep receipts and records of your contribution whenever you give out.
8. Review your taxable income through salary sacrifice.
Salary sacrificing allows individuals to set aside a portion of their salary for certain items before tax deduction happens.
Some common salary sacrifices include cars and laptops, which can help you reduce your taxable income and ultimately lower your tax amount owed.
9. Consult a tax professional.
If you are unsure about the best strategy to reduce your taxes, a consultant can help. They can help you navigate the intricacy of the tax system to ensure that you are taking advantage of every deduction, rebate, and strategy available.
Final thoughts
While paying taxes is essential to living in Australia, there are numerous legal ways to reduce your tax liability. Strategies like superannuation contributions, claiming work-related expenses, and investing in tax-effective assets can help you keep more of your money in your pocket.
