Fraud Blocker

10 Tips for Tax Minimisation.

Article by WealthSafe.

Date Published: 5 Aug 2013

There are great tax minimization tactics. I’m going to share with you 10 tax tips that can really help you seriously flash your tax. In some cases, we use tax by 10, 20, 30% or even more. Sometimes, half of it sometimes even 70%

1. Double deduction through a laptop and a mobile phone – if you buy a laptop that you want to use for your business, let’s say that instead of buying it through your company or other business structure, you buy in your own name. That is, you buy in your own name and then you reimburse yourself from your company or other structure. What happens is you claim 2 tax deductions. One is you can claim a reimbursement deduction for the reimbursement for the laptop; two, you can claim a tax deduction for the depreciation in your own name. So what happens is you claim depreciation on the laptop which would be 50% or 100%, depending on the expected life of the Laptop. You can also do exactly the same for a mobile phone. Anything else you have a fringe benefits rule that stops this double deduction, however, you can basically double dip against the taxman 100% legally with a laptop and mobile phone!

2. Overtime meal expenses – if you got overtime, let’s say you worked after 6 o’clock at night in your business. You have a company, trust, sole trader, or partnership. You can claim a meal allowance according to the ATO ruling as a deduction from your company for basically eating your dinner! So you’re going to be employed by your business and you have to work past 6 o’clock at night, and if so, you can claim your dinner as a tax deduction.

3. Meal expenses, client dinners, and being creative – let’s say that you’re going out for dinner with an important client. Normally, that is called entertainment expenses and you can’t claim it. However, let’s say the client has specially flown in from Queensland (for example) to see you in Sydney. That client can actually claim deductions for his food and accommodation because on interstate business traveling, he or she can claim a deduction. So you say to the client look, if you pay for the meal, I’ll take it of your bill. So let’s say that the client pays for his meal, and you take it off his bill. Effectively the client has got a tax deduction.

4. Trips and conferences, especially overseas – if you go interstate or overseas to do a work conference or overseas conference or business conference, you can claim deductions for your flight and your travel, and the cost of your accommodation. In particular, if you’re going over mainly for business, the cost of claiming your flight is 100% tax deductible, even if a part of your trip was for a holiday or a part of it was for fun or pleasure. So let’s just say that you’re going to America and you’re going for a business conference and five days is for business and five days is for holidays and recreation, but it’s mainly for business. You can claim the full flight at 100% and you can claim the rest of the cost of the trip 50%. And you may be able to increase the claim if you see clients or something similar when over there on the other days.

5. Using reimbursements – Often there are expenses that may not be so easily claimed in your own name, but are more easily related to your income if claimed in your business structure. Let’s say you have a book on motivational and profit growth and buy it yourself. It may be argued it is personal development for you and you cannot claim it. By contrast, let’s say that you buy a book and your business reimburses you for it. It’s far easier to justify the business getting a tax deduction than you, as it is arguably only a motivational self-help book.

6. Use family trusts  for investing or business – despite what government nowadays say family trust is still a fantastic vehicle to save tax (and protect assets) and is unlikely to be removed in the near future as the farmers and politicians all use them! A family trust allows you to split income between the most tax effective people. So for example, if a wife earns more than her husband, you give the husband more income from the trust. And in the next year, if the husband earns more income, then you give the wife more income from the trust. Or if both are earning a lot of income, you can put it into a company and only pay 30%. Family trusts are still one of the best ways to minimize tax today.

7. Use bucket companies to keep tax at 30% – let’s say you earn a huge amount of income on your family trust like $500,000 – %1,000,000 dollars profit. Potentially you’re going to be up for 40-45% tax. What you can do is distribute to a bucket company. That is, you pay the money across to the company from the family trust and keep tax at 30%. So, let’s just say you distribute a $1,000,000 to yourself; you might pay $450,000 in tax. Through a bucket company, you’ll pay only $300,000. So very effective.

8. Using superannuation, especially self-managed superannuation funds, in a lower taxed environment – Again simply, super funds only pay 15% tax as a rule (apart from certain exceptions). So, let’s say you’ve got a lot of profits in your business. You can pay up to $25,000 each for you and your partner into superannuation tax deductible and only pay 15% tax that year. And you can contribute up to $450,000 non-tax deductible every 3 years. So let’s just say you want to put $25,000 into superannuation, you only pay 15% tax on that money.

9. Keep your receipts in a top record keeping system to easily find them – you can use dropbox or some kind of computer-automated system to keep your receipts. So, very simply, if you have messy receipts, it will take a long time to find them and if you get a tax audit or need a bank loan, you’ll never find them (who relates to this). The ATO treats you far more favorably if they see you have really good receipts and you’ve got a really good record keeping system for your receipts. I know this from experience for myself and my clients. I have seen clients with excellent receipts and records walk away clean and scot free in a tax audit, no adjustments, and I had the same experience in my own tax audit.

10. Have a great bookkeeper and lodge your BAS statements on time – having good financial accounts and a great bookkeeper are critical, as they ensure that your receipts and finances are well organized. That makes a huge difference. Especially now the tax law has changed so if you don’t lodge BAS statements on time, you can be personally liable for company debts to do with GST or PAYG taxes. So make sure you have a really good bookkeeper and lodge your BAS statements on time!!!

That’s it for now. There’s my tax minimisation tips. I hope that you find it useful.

Book Your Free
Tax Saving Assessment.

Wealth Safe

Related Articles

View more tips & insights