Tax time can be stressful for many Australians. However, with some planning and knowledge, it can also be an opportunity to reduce your bill. Here are three factors that can reduce your tax bill with your accountant in Australia.
Factor #1: Contributing to Superannuation
Superannuation contributions are tax-deductible, which means you can reduce your taxable income by consistently contributing to your super fund.
You can make two types of contributions: concessional and non-concessional. Concessional contributions are those made before tax, such as salary sacrifice payments or employer contributions. Non-concessional contributions, on the other hand, are those made after tax.
Concessional contributions are subject to a cap currently $25,000 per financial year. If you are under 65, you can make non-concessional contributions of up to $100,000 per financial year.
If you're between 65 and 74, you must meet the work test requirements to make non-concessional contributions.
Know that there are limits regarding how much your contribution is each year, so you must consult with a financial expert to make the right contributions for your circumstances.
Factor #2: Claiming Work-Related Expenses
You can also claim expenses as a tax deduction if you incur them as part of your job. These expenses may include uniforms, work-related travel, and home office expenses.
To claim work-related expenses, you must show that the expense in question was incurred as part of your job and your employer did not reimburse it. You must also provide evidence of the expense, such as receipts or invoices.
Remember: You can only claim expenses directly related to your job. Any accountant in Australia will advise that you cannot claim personal expenses, such as the cost of your daily commute to work.
Factor #3: Offsetting Capital Gains with Capital Losses
If you have made a capital gain during the financial year, you can offset it with capital losses to reduce your tax bill. Capital gains are profits from selling an asset, such as property or shares. On the other hand, capital losses are the losses you incur when you sell an asset for less than you paid for it.
First, calculate your net capital gain for the financial year to offset capital gains with capital losses. This is done by subtracting your capital losses from your capital gains. If your net capital gain is positive, you must pay tax on it. However, if your net capital gain is negative, you can use it to minimise your tax bill.
There are rules around offsetting capital gains with capital losses. As with making proper super contributions, please speak to a financial advisor before ensuring you do it correctly.
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Always consult a financial advisor to guarantee you're making the right decisions for your circumstances, meeting all the relevant rules and regulations, and computing the right deduction come tax time. With some planning and knowledge, you can reduce your tax bill and make that period of your life less stressful.
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