Here is the second part to our series on the ten simple ways to reduce your tax. If you would like to see the first five items in our list, see our last blog.
6. Expenses based on Circumstances
If you know in advance that you are going to have certain deductions, choose which financial year you purchase them in. Depending on your levels of income or deductions you may want to adjust which financial year you purchase the item in. For example if you have a large expense which is tax deductable it may be beneficial to purchase it in a year where your income is high, rather than a year in which you took an extended holiday or unpaid leave.
Depending on your individual finances or circumstances, making an investment can be quite tax effective. However, this is certainly not the case for everyone. Before you decide to invest, speak to your financial planner who can advise you if an investment will suit you. Remember, the investment should benefit you now and into the future - there is no point saving a small amount of tax now if it is a poor investment and you end up losing your original capital.
8. Adjust finances based upon circumstances
If you have a partner, it may be possible to adjust your finances to suit your circumstances. For example, if a couple had funds invested in a short term account earning some interest, it would be beneficial to invest it in the name of the lowest income earner as they will have to pay the least tax on it.
9. Don’t discount the little items
Whether or not your deduction is $2, $20 or $200, they all add up over the course of twelve months. Ensure you keep every one of your receipts, no matter how small they are and you will have the best opportunity for maximising your refund. Remember, if you are unsure if you can claim it, keep the receipt and at tax time ask your Etax accountant for advice.
10. Selling Assets
If you plan to sell one of your assets which may be subject to Capital Gains Tax, there are a number of things you should consider. For example, if you have owned the asset for longer than twelve months you may be entitled to a 50% Capital Gains discount. And, you may choose to sell the asset in a year you expect to earn lower income as your capital gain won’t have as big an impact of your tax liability.
Do you have any other methods you use to save yourself tax and maximise your refund? We’d love to hear them. Contact us here or if you prefer email us on firstname.lastname@example.org.
Other posts on increasing your refund: