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 to help us all pay less tax. So read on it could help you save big $$$ this year
Part 1: ‘How to Pay Less tax’.
1. Keep Good Tax Records
These days, the ATO is asking a lot of questions about tax deductions. But that doesn’t mean you can’t pay less tax. You can still get a really good refund if you just keep ALL your receipts and records for every deductible expense throughout the year. That way you have a legitimate record for all your claims, should the ATO decde to take a closer look at your returns.
Keep track of every deduction to always pay less tax.
Record keeping is easy these days. Put aside just 5-10 minutes each week to download statements, update your logbooks and put all your receipts into a folder. Our biggest tip is to photograph receipts, using the add deductions function in your Etax account, so they’re all exactly where you need them come tax time. Save time AND pay less tax!
Find out more:
- Read our blog; 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.
- And don’t forget to catch up on what the ATO changed with regard to how you claim your Home Office Expenses for the time you work from home this year – and going forward..
2. Charitable donations are tax-deductible
Did you know that every donation over $2 to a registered charity is tax deductible?
This is something that lots of people either forget about or don’t realise they can do. Donating to charity is always a good thing but what makes it even better is that the amount you donate is an expense you can claim on your tax return. That’s 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. You pay less tax and get a great refund!
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 won’t just save you a lot of time, it will also improve your tax refund or net payable, which means you always pay less tax. This is why the ATO’s statistics show around 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. The majority of Etax clients pay well under that, with unlimited phone and live chat support, as well as year round resources included. What’s more, you only deal with real accountants, based the Etax Brisbane support centre. Now that’s definitely the easiest way to pay less tax!
5. Medicare Levy Surcharge vs Private Health Cover: It’s important, to maximise your tax refund
This is a big one! 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 Surcharge 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.