Tax is inevitable - if you are earning money. So even though we all have to pay it - there is no reason why you should pay more than your fair share. My top 10 tax tips are:
- Investments should be in the name of the family member who pays the least amount of tax. Even better would be to use a family trust so that there is true asset protection and income sharing.
- If you are on salary try to salary sacrifice some of your salary into tax free benefits. E.g. a laptop computer can be salary sacrificed and have no tax paid at all.
- Pay deductible expenses as close to June 30 as possible to minimize the cash flow impact.
- Keep receipts organized and use the tax office record keeping software to itemize what you have been spending so that your accountant's job is easier at year end - it will save you money.
- Don't prepare you own tax return - you WILL miss opportunities to claim deductions.
- If you use your car for work, keep a log book AND keep all your expenses for the year. It will allow you the option of selecting the best method of claiming the cost of running your vehicle - rather than just the easiest method.
- Keep track of your interest and provide tax file numbers to your bank so that you don't have tax deducted until you file your return.
- As we approach June 30, if you have made a capital gain and have an investment that is making a loss consider selling that investment to offset it against your gain. As an example, lets say that you have some shares which you sold and have made a profit. You also own some shares that have been s mashed by the market lately. Consider selling them to crystallize the loss - which can offset the gain. You can even buy them back later if you really want to hold them.
- Superannuation provides great tax saving benefits. Salary sacrificing and contributing to your low income earning spouse's fund can give great tax benefits.
- Prepay the interest on your investment property so that you can claim the deduction now.
Remember we all have to pay our fair share of tax but there are strategies that can be used to minimize the amount that you pay.