Nicole Pedersen-McKinnon* reveals 10 last-minute thing people can do to cat their tax bill.
The race across the tax year finish line is on… and you have only days to stop the Australian Taxation Office (ATO) from winning.
Literally days.
Any BPay transfers to move and manoeuvre money to cut your tax bill probably need to be made by Monday, June 27.
Here are 10 last-ditch ideas to keep your dosh.
- Spend up big
Get spending, but only if you need what you buy.
For example, nurses can claim uniforms – indeed there are even weird, wonderful or even outrageous things for which you might be able to claim deductions.
Go to the ATO website for more information about what you can claim for your industry.
The biggest wins are where spend pushes you into a lower tax bracket – so below the 2021-2022 taxable income thresholds of $18,201 (there is no tax up until this amount), $45,001 (19 per cent up to here), $120,001 (32.5 per cent up to here), or $180,001 (37 per cent below and 45 per cent once you hit this amount).
- Rummage for receipts
Quick – fill in those mileage log books and hunt down your receipts.
Once more, the easiest and best way to slash your tax is probably deductions.
So think about any cost that relates to your income… you may be able to claim it.
For instance, if you are a nurse, what about dry cleaning? Check on car costs if you carry equipment.
And don’t forget to claim your work-from-home expenses.
- Weigh a prepay
If you’re likely to cop a bigger tax bill this year than next, you could pay some deductible expenses up front.
Even 12 months’ worth.
The big ones are income protection insurance and interest on investment loans.
Just be sure this is better than other, alternative uses of the money.
- Delay pay
This might seem strange but if this has been a prosperous year, and next year might not be so, do what you can to shunt further income into next year.
Think bonuses, commissions, overtime… again, keep that tax bracket low.
If instead this year’s been a little lean, it might be a good tax time to offload any assets, like shares.
- Love your spouse
If your spouse is earning less than $40,000, making an after-tax super contribution of $3,000 will net you a tax offset of up to $540 off your bill.
That’s a straight-up discount… in a matter of days.
It’s called a spouse contribution.
- Supe(r) up your savings
OK I am getting a little carried away here as it is not technically a tax tip, but listen up if you are earning but less than $56,112 a year.
That’s the threshold where, if you make an after-tax super contribution of $1,000 before June 27 (because of the afore-mentioned BPay delay), you’ll get up to $500 from the government.
Called a ‘co-contribution’, this goes into your super fund rather than into your own pocket.
But while you are being money smart, get on to it; if you don’t use it you lose it.
- Make proper(ty) money
For all the Aussies who own property, many don’t claim the deductions they could.
In a nutshell, you can deduct anything to do with managing or maintaining your property – agent’s fees, repairs, rates and, again, loan interest.
It’s worth getting a professional depreciation schedule – accountant or quantity surveyor – if you don’t already.
This is because your biggest boost might come from the decline in value of furniture, appliances and renovations, and claiming this over a number of years.
- Get travelling
Have you been putting off work-related or investment-related trips?
A pre-June 30 work jaunt and/or investment property inspection could cut your tax – for the business-related portion anyway.
Experts also say that work-related training is one of the most overlooked but effective deductions.
Sign up and pay for something now?
- Get charitable
Higher-rate taxpayers pay little more than half for donations to a registered charity, because they are tax deductible.
And if you have any spare money, there sure are people who could use it right now.
- Consider health cover
If you earn over $90,000 as a single or $180,000 as a couple and don’t have private hospital cover, get it.
Otherwise, you’ll pay a fine called the Medicare Levy Surcharge – and it’s up to 1.5 per cent.
Often this is more than the cost of cover itself.
OK there’s not much of this year left but put it in place for 2022-23.
*Nicole Pedersen-McKinnon is the author of How to Get Mortgage-Free Like Me, available at www.nicolessmartmoney.com.
This article first appeared at au.finance.yahoo.com.
