How to Minimise Your Tax

how to minimise tax

There are many ways to legally reduce your tax burden. Whether you’re a business owner, a property owner, or merely want to reduce your personal income tax, use these practical tips to reduce your tax burden and make the lodgement of your next tax return Sydney fuss free.

Keeping receipts and asking for tax invoices is a good practice that can save you in the form of deductions. Keep track of work-related as well as personal expensed.

  • Allocate a folder to your receipts and do a monthly review and listing to reduce the big rush when your annual tax return is due.
  • You can only claim up to $300 of work-related expenses if you don’t have the necessary receipts.
  • Use a log book for fuel credits. Make sure you know what qualifies as work-related travel (which usually doesn’t include driving from home to work).

Both businesses and property owners can claim for depreciating assets.

Businesses

  • Under the uniform capital allowance system, you can claim a deduction on capital assets based on its effective life.
  • If you own a business with less than $2 million annual turnover, you may choose to use simpler depreciation rules.

Depreciation for business assets tends to be a complicated matter when it comes to tax so it’s best to consult professional accountants Sydney that can assist with your specific situation.

Investment Property Owners

If your property generates income, you can use depreciation to reduce your tax burden (which is strictly speaking a form of negative gearing – see elow). In principle, these deductions are geared at

helping property owners reduce the costs associated with wear and tear on their property.

What you may be able to claim deductions on:

  • Carpets
  • Curtains
  • Whitegoods
  • Any other item that depreciates over time due to wear and tear

Generally, you’ll need to have a professional quantity surveyor prepare a special report (a Tax Depreciation and Capital Allowances Schedule) to be able to claim this deduction from the ATO.

If you own an investment property, you may be able to reduce your tax burden through negative gearing. Not many people actually buy property with their own money – most people borrow money to invest it.

Negative gearing explained:

  • Where the costs of maintaining your investment exceed the costs of maintenance, you will reduce your taxable income.
  • You can claim for deductions on purchasing costs. These can include valuation fees, stamp duty, mortgage insurance where applicable, and depreciation costs.
  • You can also claim for building costs, which covers things like fixtures and fittings and furniture.
  • You can also claim deductions for things like advertising, body corporate fees, interest on loans, legal costs, and many other expenses associated with running your investment property.

Every time you give to a non-profit organisation, request a receipt for your donation. All donations over $2 are tax deductable, and the amount you can deduct from your company or personal taxable income can be significant.

If you’re undertaking part-time study or have employees in training, check with you accountant as to whether you’re able to deduct these expenses from you or your company’s taxable income.

Source: taxeffective.com.au

Category: Taxes

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