How to Maximise Your Income and Minimise Your Tax Bill
Paying taxes is part of life, but there’s no need to pay more than necessary. By understanding and using some straightforward strategies, you can significantly reduce your tax bill and keep more money in your back pocket. Here are some practical, easy-to-follow tips to help you maximise your income while minimising your tax.
- Contribute Extra to Your Superannuation
Your superannuation is one of the most tax-effective ways to save money in Australia. By making extra contributions through salary sacrificing, you reduce your taxable income and are typically taxed at a lower rate (15%) than your regular income tax rate, which can range up to 45%. According to the Australian Taxation Office (ATO), you can contribute up to $30,000 annually (including employer contributions) at this concessional tax rate.
- Claim Eligible Tax Deductions
Many Australians miss out on deductions simply because they don’t know they’re eligible or don’t keep good records. Common deductible expenses include work-related expenses such as home office costs, uniforms, tools, vehicle expenses (if used for work), and professional memberships. Always keep receipts and document your expenses clearly. The ATO provides comprehensive guidelines to help determine what’s deductible – you can read this here.
- Invest Tax-Efficiently
Investing smartly can reduce your tax bill significantly. In Australia, if you hold investments like shares or property for over 12 months, you receive a 50% discount on capital gains tax when you sell. Additionally, certain investments, such as Australian shares, provide franking credits, which can reduce your overall tax payable.
- Take Advantage of Tax Offsets
Tax offsets directly reduce your tax payable. For example, the Low and Middle Income Tax Offset (LMITO) benefits individuals earning under certain income thresholds. There’s also a private health insurance rebate available to those with eligible private health cover, reducing the cost of your insurance and tax bill simultaneously.
- Plan Ahead for End of Financial Year
Proactive tax planning can greatly reduce your tax bill. Prepaying deductible expenses like subscriptions, interest on investment loans, or contributing extra to your super fund before June 30th can reduce taxable income for the current financial year.
Get Professional Help
Navigating the Australian tax system can be complex. Getting personalised advice tailored to your situation is beneficial.
If you’re ready to maximise your income and minimise your tax effectively, contact Apex Financial Services Group today at (07) 3180 8831 or email admin@apexfsg.com.au for expert advice.