LET’S TALK TAX MINIMISATION FOR INDIVIDUALS
Who wouldn’t want to make sure they pay no more than their fair share of tax.
This is why we encourage all our clients to establish an effective tax plan that minimises these obligations where possible.
After all, you work hard for your income and we believe you should take all legal avenues available to you in order to optimise the return on your hard work and expertise.
In this article, we’ve highlighted some general areas to consider.
Of course, every situation is different and we encourage you to speak with your financial advisor and accountant to determine how each is applicable to you.
1. UNDERSTANDING DEDUCTIONS
It is important to know all the common deductions you can claim in your occupation.
This would include what work-related expenses or self-education expenses you can claim as well as charitable donations.
2. TAX BENEFICIAL ACCOUNTS
There may be certain accounts you can utilise that have a tax benefit to you. Options with your superannuation should also be explored to identify how contributions can assist you.
3. INCOME SPLITTING
Depending on your circumstances you may be able to use a family trust, distribute income to family members or choose income splitting to help reduce your overall tax liability.
4. TIMING OF INCOME AND EXPENSES
You may be able to defer income or prepay expenses to optimise your tax outcomes in different financial years.
5. MANAGING CAPITAL GAINS
It is advised that you have a strategy for managing capital gains, such as realising capital losses to offset gains.
6. SMALL BUSINESS CONCESSIONS
If you run a small business, you should identify what concessions there are available to you.
Options such as small business tax offsets and instant asset write-offs might be useful tools for you from time to time.
7. TAX PLANNING VS. TAX EVASION
Tax planning has legal boundaries and you need to distinguish it from illegal practices like tax evasion. We believe in keeping a clean ethical approach to this subject.
Your Accountant can help you understand what boundaries you need to stay within.
8. TAX IMPLICATIONS OF INVESTMENTS
You should explore how different types of investments (e.g., property, shares, cryptocurrencies) are taxed in Australia and identify strategies to minimise tax on investment income.
9. MAXIMISING GOVERNMENT BENEFITS
Various government benefits are available including the progressive tax system we have in Australia with different tax levels at different incomes. It is worth identifying which government benefits are applicable to you. This could include parent’s benefits, education benefits, carer benefits and working from home benefits.
10. SEEK PROFESSIONAL ADVICE
Accountants, tax professionals and financial advisors are experts in various areas of this subject and to ensure compliance with tax laws while optimising tax outcomes.
Therefore, we believe you should always seek professional advice from the right person at the right time.
With these tips in mind, we trust you feel confident about developing a strong tax plan for yourself that helps you pay the tax you owe and optimise own return and wealth creation over time.
If you have any questions, why not give our team a call and arrange a no-obligation discussion about your circumstances and goals.
Call Finwell Group on (03) 9017 3235 or email better@finwellgroup.com.au
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