Tax time is approaching and there are ways to minimise your income by putting your money in the right places and spending strategically. Your accountant is your best port of call to legally minimise tax for your personal or business taxes, but here are some tips to get you started.
How To Minimise Business Taxes
- Prepay expenses
This is the time of year to prepay your supplier bills if you can. They are necessary expenses so you may as well include them in this part of the financial year.
The only reason you may not follow these strategies is that you want to maximise your company’s reportable income. Speak to your accountant about your plans for the next financial year in terms of borrowing or seeking investors to figure out which move is right for you.
- Buy assets now
Similarly, if you need any new equipment or vehicles, now is the time to buy. Not only are there countless EOFY sales for businesses at this time of year, but you will also be able to reduce your taxable income further.
With this being said, be aware that the instant tax write-off has changed from 1 July 2023. Visit the ATO website to find out more or contact your accountant.
- Know what you can claim
Most of your business operating expenses are tax-deductible which is why it is important to keep track of your spending and activity to help reduce business tax when it comes to tax time.
Among other things, as a business, you can claim:
- Asset depreciation
- Operating costs
- Training courses
- New assets
- Safety expenses
- Fuel expenses
- Bad debts
There are even a number of COVID-19-related deductions that have come into effect in the past few years. Speak to your accountant and make sure you are claiming everything you can.
Personal tax reduction tips
- Additional superannuation contributions
Additional superannuation contributions are a win-win. Not only does adding to your super help you to reduce your taxable income and reduce tax, but it is also an investment in the future. It’s a way of reducing the tax you pay without directly spending money.
Be aware that super contributions may still be subject to tax, depending on your income, your age and the amount you contribute.
If you are claiming a tax deduction on super contributions as an individual or because you are self-employed and pay your own super, you will also need to fill out a notice of intent. You can find this on the ATO website. This form ensures that you meet the criteria and informs the ATO of your contributions to your super fund.
If your spouse is either not working or are a low-income earner, then you can contribute to their superannuation which will help to reduce your own tax to pay. hese contributions are tax-deductible, and you may be eligible for a tax offset of up to $540.
If you are thinking about contributing to your superannuation or want more information, then please consult a financial advisor as this article does not constitute as financial advice.
- Salary sacrifice
Salary sacrificing is another way to reduce tax. You may do this by asking your employer to make additional contributions to your superannuation or by purchasing a vehicle and having the payments come from your pre-tax salary.
- Track your property expenses
As a landlord, many of your expenses are eligible for tax deductions, as long as your property is either tenanted or is actively seeking tenants.
Keep track of these expenses or ask your property manager to send you a detailed report to share with your accountant. Forgetting about things like the fees you have paid to advertise and manage a property will mean you lose out on deductions, so report every dollar you have spent to your tax accountant and they will let you know what you can claim.
- Take advantage of government incentives
The Australian government offers a range of incentives to encourage Australians to save for retirement. One of these incentives is the co-contribution scheme. If you earn less than $57,016per year, and you make a personal superannuation contribution, the government will match your contribution up to a certain amount. This can be a great way to boost your superannuation balance and reduce your tax bill.
- Charitable donations
Donations to registered charities are tax-deductible, meaning you can claim them as a deduction on your tax return. You can donate money, goods, or services to a charity of your choice, and you may be able to claim a deduction.
This isn’t so much about saving money, just about being aware that you can let your accountant know about the expenses and reduce your tax return by including them.
Work with a professional tax accountant
Whether you are a business or an individual, the best way to lower your tax bill and raise your rebate is to enlist the help of a professional. This way you are ensuring that you are claiming every valid deduction and filing your tax return as required to help minimise business tax.
Getting ready for tax time? Contact Crest Accountants today.
Disclaimer: The information contained in this news post is general in nature and is intended to provide a general summary only and should not be relied on as a substitute for professional advice. Whilst the information is considered to be true and correct at the date of publication, changes in circumstances after the time of publication may impact upon the accuracy of the information.
