We asked our top tax accountants for the easiest ways to pay less tax to the ATO and keep more money in your wallet.
They had a LOT of answers. So we narrowed it down to their top 10.
Here’s part one of ‘How to Pay Less tax’. It could help you save big $$$ this year
1. Keep Good Tax Records (with the right method, it’s very easy)
You need receipts for tax deduction claims, so you can show them to the ATO if they ask about your deductions. These days, the ATO is asking a lot of questions about tax deductions.
Thousands of people miss deductions they could have claimed, every year. That’s millions and millions of dollars that the ATO keeps, where people could have got it back in their tax refunds.
Do you keep track of every deduction?
Simply keep track of those receipts – it’s the best way for you to remember everything that you can claim. And that means, more money in your tax refund.
Record keeping can be easy. Put aside just 5-10 minutes each week to download statements, update your logbooks and put all your receipts into a folder. (Or, photograph them using the Etax mobile app and save them straight into your Etax account). We guarantee it will save a lot of time at the end of financial year— and you pay less tax!
Here are some tips to help keep track of your tax deductible records with minimal worries:
- The Etax mobile app makes it easy to save receipts, using your mobile phone camera.
- Read The key to paying less tax is good record keeping to help you understand exactly what records you need to keep. Those simple habits take just minutes and ensure you never miss out on your tax deductions.
2. Charitable donations are tax-deductible
Did you know that every donation over $2 to a registered charity is tax deductible?
Donating to charity is always a good thing but what makes it even better is that the amount you donate is claimable on your tax return. That is definitely a win-win.
After you make a donation, you should receive a receipt. Keep it in your tax receipts folder! At tax time, add up the charity receipts and enter the total into the charity donations section of your tax return.
- One thing about donations we should clear up: Your donations do not come straight back onto your tax refund. The amount is subtracted from your taxable income, which means you get a percentage back.
3. Claim everything you are allowed to claim as a tax deduction
In general, if you have to spend money on anything that relates to “earning your income”, make sure you claim it.
Even if you purchase an item partly for work and partly for personal use, you can still claim the work-related part as a tax deduction.
Not sure whether you can claim a particular item? Keep the receipt and ask Etax support in the ‘Any other questions?’ section in your next Etax return. Remember, it is always better to keep a receipt and not be able to claim it, than to throw it out and miss a valuable tax deduction later on.
4. Get Affordable Advice from a Tax Agent
In most cases, using a tax agent or accountant won’t just save you a lot of time, it will also improve your tax refund or net payable. This is why the ATO’s statistics show 70% of Australian tax returns are lodged with a tax agent – like Etax!
Etax are experts in tax and constantly stay up-to-date with changes in tax legislation. We’ll try to find deductions you are unaware of or an offset you didn’t know existed. Quite often our people quietly spot and correct little mistakes that could slow down a taxpayer’s refund. Your refund. Left unchecked, these mistakes can also cause an ATO reassessment or audit.
The best part is; the cost of the Etax online return is very low and you’ll claim it as a tax deduction on next year’s tax return. If you’re paying $150 or more to your tax agent, you might want to shop around. Etax users pay, on average, well under $100 and that includes unlimited support and advice by phone or chat, with real qualified accountants who work at the Etax Brisbane support centre.
5. Medicare Levy Surcharge vs Private Health Cover: It’s important, to maximise your tax refund
If you don’t have private hospital insurance and your income is more than $90,000 for singles or more than $180,000 for families, you will pay a minimum of 1% Medicare Levy Surcharge. That’s on top of the compulsory 2.0% Medicare levy paid by most taxpayers.
A basic private health cover plan can cost less than the 1% of your gross income – less than the medicare levy that you’ll pay if you have no insurance – and that’s why private cover may be worth a look. (Plus, private health cover has some other advantages like shorter waiting times.)
Do your homework before taking out private health cover. Make sure you get cover that’s appropriate for your circumstances and your finances. Here’s more info about private health cover and your taxes.