Basic Tax Tips Anyone Can Follow: Save Money, Pay Less Tax

Tax Tips For Everyone

  • Make sure you prepay membership fees for unions & professional associations and make any charitable donations just before the end of the financial year (June 30) so you can claim a tax deduction.
  • Non-business taxpayers (such as employees or rental property owners) are entitled to an immediate deduction for depreciating assets which cost less than $300 if you satisfy the ATO’s rules for depreciating assets
  • Prepayment of interest on a mortgage loan on a rental property will entitle you to a full deduction in the year paid.
  • If you have a few $1000 in spare cash, don’t leave it in your transaction bank account earning no interest, instead put it in an Online Savings Account with a High Interest Rate and No Bank fees
  • If you contribute $1000 cash to your super fund … than at the end of the year the ATO will deposit upto an extra $1500 in your super account, more details at Turn $1000 into $2500 with Super Co Contributions
  • If you were lucky enough to sell assets like shares and made a large profit you’ll have a lot of potential capital gains. Check out your list of assets and see if there are any that have made losses and you were going to sell them soon anyway.

    If you do sell them this generates a loss you could claim against capital gains from the assets which made a profit when sold.

    This also frees up some money to invest in assets that have a hope of rising in value.

Tax Tips For Single People

  • If you’re single and going to earn more than $100,000/year (from July 2008-June 2009) make sure you take out a basic private health insurance plan (with an Excess of $500 or less) or your Medicare levy will rise from 1.5% to 2.5%.

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Tax Tips Couples Can Follow

  • Make sure that any spare cash you have is kept in a Online Savings Account with a High Interest Rate and No Bank fees and open it in the name of the partner who earns less money so that the interest is taxed at a lower rate
  • Similarly if you’re thinking of purchasing shares or joining a managed share fund, do it in the name of partner who earns less money so that the income earned from it is taxed at a lower rate.

    If that partner gets taxed at less than the 30% company tax rate you’ll also get a bonus tax refund on any fully franked dividends

  • If you’ll earn more than $150,000* (from July 2008-June 2009) combined income a year make sure you take out a basic private health insurance plan (Excess of $1000 or less) or your Medicare levy will rise from 1.5% to 2.5%. *=threshold increases for families with 2 or more children
  • If one partner is earning a lot less than the other and therefore has a much smaller superannuation account balance, see if they qualify to Turn $1000 into $2500 with Super Co Contributions

Tax Tips for Business Taxpayers

  • Bad Debts – Does any amount owed to you constitute a bad debt? If so, for it to be deductible in the tax year it must be ‘written off’ by 30 June.
  • Make sure you time your Stock and Asset Purchases before 30 June. Get rid of your slow moving stock by sale or disposal. Dispose of obsolete assets on your balance sheet. Review your assets register and update with all bought and sold plant, equipment and furniture. Purchase bulk consumables such as printing paper and cleaning products to get a deduction in this tax year rather than the next
  • The Tax Office allows business taxpayers that are not small business taxpayers (ie. generally those with an annual aggregated turnover of more than $2 million) to immediately deduct depreciating assets costing less than $100 so by bringing forward the purchase of items such as staplers, hole-punches, small tools etc, you can claim immediate deductions which will reduce your tax payable for this financial year.
  • Superannuation Guarantee is payable by employers on 9% of each employee’s (including some contractors) ordinary time earnings. In order to be deductible in the current financial year, contributions for the year April-June quarter must be received into your employees’ super funds by 30 June.

More Tax Help

The Australian Taxation Office’s FREE E-tax service lets you prepare your tax return and baby bonus claim electronically and lodge them online – Do Your Tax Return Online Using Free Etax Service

Since I wrote a few tax tips articles on this website I’ve received a lot of questions from people about their tax returns. The most popular questions I’ve answered are collected at Australian Personal Tax FAQ: Questions & Answers

10 thoughts on “Basic Tax Tips Anyone Can Follow: Save Money, Pay Less Tax”

  1. Good pointers above on the health insurance. I would also add that budgeting is great way to save more money. Make sure you know & control where your money is going – that’s the only sure way you will have some left at the end of the month.

    You can also use some sort of personal finance software. I use parcus group software for $29.

  2. great site! well if they have a home loan they should pay the spare $1000 into their offset account if they have one. interest on savings is taxed where as interested saved on a home loan is not!

  3. Nice point about online banks offering higher interest rates. I’ve noticed that, but haven’t moved my savings yet! I’m missing out on earnings every day!

  4. Thanks for the tax tips and super co-contribution info – sometimes saving for the future in the form of super is one of the most important forms of saving. There are lots of ways to save a few hundred dollars each month from your budget.

  5. Thanks for the pointers on saving at tax time as this is something that all want to do as well as have more money in our pocket on a our weekly basis.

  6. Neerav, great post… I’ll definitely think about opening an online account… are these accounts insured by the gov’t?

    EDITOR: yes.

  7. Excellent tips. I didn’t ever think about sticking our savings into an online savings account with higher interest. I also seriously thank you for the super fund contribution idea. I think you’ll help me save money. Thanks.

  8. I am contribute for foreign superannuation ( I have dual citizenship ). Can I claim my contribution as tax return for foreign superannuation?

    Regards

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