5 Simple ways to reduce your tax bill in 2016
This is one of the biggest goals for most individuals we speak to and rightfully so. Who wants to pay more tax than necessary and how can you reduce your tax bill in 2016? You work hard for your money so with a bit of careful planning you can significantly reduce your tax.
Have you ever wondered how your friends and family always seem to get a better tax refund than you or have a far smaller tax bill? Well, check out these 5 simple ways to minimise your tax.
1. Keep good records
Make sure you keep all of your receipts, even if you are not sure you can claim them. Keep a file and put all of your receipts in it every week. Then, when it comes to tax time you can easily review all of the receipts with your tax agent and discard those you can’t claim. Every year thousands of Australians miss out on claiming deductible expenses and end up paying more tax than they really need to.
2. Offset accounts
Offset mortgages are a great tool for saving on tax as well as saving you interest and minimising your mortgage repayments. All money you hold in a savings account earns interest and this is taxable. However, most people will find that they are better off keeping that money in an offset account, foregoing the potential interest they could earn and minimising the interest they pay on their mortgage.
3. Claim for everything you are entitled to
Claiming deductions is one of the best tools in reducing your overall tax payable. If you have to spend money during the year and it’s work related, then keep the receipts. Even if the items you bought are both for work and personal use, you can still claim an apportioned deduction.
You will be amazed at what it can all add up to over the course of a year.
4. Medicare levy surcharge
If you do not have private health insurance, as soon as your income exceeds $90,000 for singles or $180,000 for families you will be required to pay a minimum of 1% extra in the form of the Medicare Levy Surcharge. This is on top of the compulsory 2% Medicare levy paid by most Australian taxpayers.
So make sure you get all of the benefits of private health care for you and your family whilst saving on any levy surcharge.
5. Seek the advice of tax professionals
In most cases using a registered tax agent will not only save you a lot of time, but will also maximise your tax position. This is why the ATO’s statistics show 70% of Australians use a tax agent’s services.
The tax laws are CONSTANTLY evolving, and if your tax agent isn’t up-to-date with the latest changes, then it’s a good bet that you will be paying more tax than you need to. What’s more, since the ATO is using increasingly sophisticated data matching techniques, you could be subjected to a tax audit so it’s important to have an expert on your side.
If you are looking for a tax agent who works with their clients to ensure that they achieve the best taxable position possible, then speak to us today. Our experienced team can guide you through the tax maze.