Tax time is just around the corner and no matter which tax bracket you find yourself in, chances are you’re looking for ways to keep more money in your pocket this end of financial year. Tax minimisation is a legitimate way for you to save money this EOFY and make this time of year just a little less stressful. By following the Australian Government tax policies and rules, you can reduce the amount of tax you have to pay this June.
Private Health Insurance
If you’re single and earn more than $90,000 a year, or you and your family collectively make more than $180,000, you’re probably paying the Medicare Levy Surcharge (MLS). Most taxpayers have to pay a mandatory two per cent Medicare Levy, however higher income earners are charged an additional one per cent in the form of the Medicare Levy Surcharge.
This extra one per cent isn’t ideal, but getting private health insurance is a great way to avoid paying this additional tax. Basic private healthcare plans cost less than the one per cent MLS, so for some people, this might be a valuable way to lower your taxes. Not only will you benefit from paying less taxes, but you’ll also enjoy the added advantages of private health care, including shorter wait times and access to a wider variety of services. If you think this might be the right solution for you, visit the CompareClub to find a plan that is best for you.
Donating to a registered charity is a great way to spend your hard-earned money in a meaningful way, while also reducing how much tax you pay. . All donations over two dollars are tax-deductible, so it’s always a good idea to give - just make sure the organisation you are donating to is a registered charity. If they aren’t, you may not be able to claim a deduction.
After you donate, make sure you get a receipt and hold onto it for tax time. All you have to do is add up your donations from the last financial year and claim away. When you get your refund, you won’t see your donations come back right away. Helpful reminder: the donation will come back to you as a percentage of your total taxable income.
For over thirty years, the Starlight Foundation has been partnering with healthcare professionals to help bring fun, joy and laughter that allows sick kids to be kids. At Cashrewards, we’ve pledged 1% of our equity, profit, and employee time towards supporting the Starlight Foundation. This EOFY, we’d encourage you to please consider donating to help seriously ill children and young people.
Claim on work expenses
If you spend any money on anything related to earning income, you’ll want to claim it. This includes anything you might spend on securing multiple passive income streams or any costs you incur if you now work from home. Be sure you declare all possible deductions to ensure you’re paying less tax. Even things that seem small and inconsequential can add up to huge savings come the end of financial year. For example, if you purchase a new laptop that you use at work and home, you can still claim the money you spent on it as a work-related tax deduction. If you're a Cashrewards member, you can refer back to your My Rewards tab in your account to refresh your memory on previous purchases you could be claiming!
If you’re unsure whether or not you can claim a specific item as a work-related tax deduction, keep the receipt of purchase and ask a tax professional at tax time. Remember to hang on to those receipts! It’s always a good idea just in case you're able to claim - it's better to have the receipt and not claim than to lose the receipt and miss out on tax savings.
Keep accurate tax and financial records
Not having a comprehensive filing system can cause a lot of headaches for you at tax time. Today, the ATO is far more likely to ask questions about your deductions than they were even just a few years ago. Being organised about filing receipts and keeping track of deductions is an easy way to make sure saving money at tax time is as hassle free as possible.
Dedicate ten minutes each week to downloading statements, updating logbooks and make sure your receipts are in a place where you can easily access them.
Finally, if you get all your expenses in before the end of June this year, you can claim them in this year’s tax return, reaping the benefits almost immediately. If you purchase in July, you’ll have to wait till next year to claim it. If there are purchases you’re looking to make in the short-term, consider whether it’s more beneficial for you to buy them before or after EOFY.
There are many ways to reduce your taxable income and save money in the lead up to EOFY 2021. Plus, if you’re a Cashrewards member, you’ve got the added benefit of earning cashback on a wide range of products and services you may purchase throughout the financial year. Happy Tax Time!