Tax Planning for Individuals

Even as an employee there are ways to help keep money in your pocket and not pay the ATO as much income tax. Here are a few ways we have advised clients in the past:

  1. Salary Sacrifice to Your Superannuation Fund.
    This is a great way to reduce your tax if you are in a tax bracket of 20% or more because it enables you to place your pre-tax salary into super rather than having it taxed at your marginal tax rates.
  2. Income Replacement Insurance.
    You have a great job, nice house, and fantastic future. It all tumbles down if you lose your main asset. Your ability to earn an income is your greatest asset. Income replacement insurance is generally tax deductible, and it can cover up to 75% of your salary if you cannot work due to illness or accident. The premium is a small price to pay for protecting your lifestyle. FORSYTHS have years of experience at understanding what you need to look for in a policy. It is important to discuss your individual needs before looking for cover.
  3. Vehicle Log Book.
    If you use your car for any work related purpose, you can claim up to 75 cents per kilometre. To enable us to claim the maximum amount, it is important to keep a log of the times and distances you use your vehicle for tasks performed on behalf of your employer.
  4. Work Expenses.
    Now is the time to look for receipts or credit card statements proving expenditure on work related items such as:
    – Uniforms, tools of trade, Union Dues, memberships of professional associations or trade groups, telephone used for work purposes.
    – Fees, travel and course materials for any courses undertaken that are related to your present work and will improve your ability to do that work.
    – Food and accommodation for trips undertaken for work and not fully reimbursed.
    A tax return checklist for individuals is available here.
    A rental property checklist is available here.
  5. Medical Expenses.
    This offset is being phased out. If you did not claim it in the 2013 and 2014 income tax years you cannot claim it in 2015.
    If you are eligible and your out of pocket medical expenses exceed $2,218 (or $5,233 if you have an income over $90,000 for singles or $180,000 for families plus $1,500 for each dependent child (you will be able) to make a claim for the tax offset.
  6. Defer Income or Capital Gains.
    If possible, arrange to sign contracts for sale of shares or property which are giving positive returns after 30 June . Of course, this runs the risk of losing the sale or profits should there be a downturn in the market. You can also ask for bonuses or commissions to be deferred until after 30 June and arrange for term deposit interest to be paid after 30 June.
  7. Quantity Surveyors Report for Investment properties.
    The tax office won’t accept estimates on values by you, accountants, or real estate agents. They will accept a Quantity surveyor’s estimates. Their report lists claims you can make for depreciation and the cost of constructing the building itself. The cost of these reports is generally recovered several times over in the first year by the tax savings they generate. The cost is also tax deductible.
  8. Sell Loss Making Investments.
    If you have an investment that has lost money, and other investments which may have made a gain, then selling the loss making investment will help reduce the tax on any gain. If you feel the investment will turn around later you can always buy it again.
  9. Prepay Expenses.
    Expenses on rental properties or investments can be pre-paid before 30 June. Therefore, if you have a high income, you can pay for expense such as repairs, pest control, cleaning, tree lopping etc. before the end of the financial year.

 

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