TIP 1: Prepay your expenses
You can pay up to 12 months of tax-deductible expenses in advance. For example, magazine subscriptions are common, but also, prepaying interest on investment property loans or margin loans for stock, and income protection insurance. A great time is to do it before 30 June.
TIP 2: Claim Everything You Possibly Can
It’s very important to keep all of your receipts. If you are in doubt, keep the receipt and ask your accountant. You would be very surprised as to what you can claim!
TIP 3: Claiming Air Flight Deductions on a Private Holiday
Have you ever wanted to go on a private holiday and still claim a tax deduction?
Well, you can … sort of.
If you go on a business or work-related conference and then on a holiday afterwards, you can claim a tax deduction for the expenses related to the business or work-related part.
However, here is a little-known fact.
You can claim 100% of a flight for a conference which is mainly to do with work, EVEN IF you also did a private holiday while on the trip, provided the main purpose of the flight is for work.
So make sure you tell your accountant this at tax time!
TIP 4: Eligible write-off rules
In the past when you bought assets in a business, you could not claim an immediate tax deduction. You had to depreciate the cost of the asset over time.
If you own a small business, you can write off assets that cost less than $6,500 in the first year as an IMMEDIATE tax deduction, and not depreciate it.
So for example, if you buy a laptop or a high-level scanner, you can claim it upfront.
This can make a very big difference to your tax at the end of the year.
TIP 5: Use Independent Contractors or Outsourced Workers
You can slash costs such as superannuation or PAYG tax (which is a pain for cash flow management in a business) by hiring independent contractors through a family trust or PAYG.
It is very important that contractors work for you through a family trust. The ATO specifically recognises that superannuation does not have to be paid in that instance. Whereas if you engage a contractor through an individual ABN, you run the risk of an audit and paying super later on.
You can also hire outsourced workers and get the same result. For example, hiring staff in the Philippines under a contract of service avoids superannuation, lowers wages, and PAYG tax.
TIP 6: Avoid contributing and claiming more than $25,000 tax-deductible super contributions
This is less a tax-saving tip and is more a warning of what can cost you a fortune.
The cap on concessional contributions pre-tax is $25,000. If you exceed your contribution cap, you will be up for a significant amount of penalty tax.
So be very careful when you salary sacrifices.
TIP 7: Use 3 Generational Testamentary Trust Wills To Save Tax for your Loved Ones
When you draft up your will for your kids or loved ones, make sure you use a 3 generational testamentary trust will.
In a simple will, your kids will pay tax as normal but with a tax-free threshold even if under 18. That is a great tax benefit.
But it gets better. If you have a 3 gen will, let’s say you die and leave your assets to your kids. Let’s say you have grandkids. Your kids can distribute money from your estate to your grandkids to further save tax. Something that they can’t do with a simple will.
So make sure you have a proper will on death so your kids get the money, not the government!
TIP 8: Work Related Car Expenses
This is one of my personal favourite.
The usual rule is to claim car expenses, you need a logbook. This is to work out the percentage of business use. You also need to do it now for fringe benefits tax purposes where you are claiming your car through the business.
However, there are 2 ways to claim car expenses without going to all that hassle:
See your accountant about this at tax time.
TIP 9: Computer and Mobile Phone Expenses
If you have a computer or mobile phone, and use it for work related use as well as personal use, you can claim the cost of your mobile phone plan as a tax deduction.
If you have a mixture of private or business use, you have to apportion it.
For example, assume you have a Telstra plan and you are paying $99 per month. You can claim that payment as a tax deduction. If you spent half the time on the phone for business use, you can claim $49.50 per month as a tax deduction.
TIP 10: You may have Lost Super!
This is not so much a tax tip but can help you find some hidden money.
Many people have had a job for a short time and have no idea who their superannuation was paid to.
The good news is, there is a service called the Super Seeker website. In this website, you can find out any superannuation that was paid to you by anyone. And then you can rollover it to a self managed superannuation fund, or consolidate it into one fund.