5 Tips for tax deduction!

Tax season is coming!

Here are some suggestions that you can reduce your personal tax liability:

1. Claim Deductible Expenses

You can claim deductions for expenses directly related to earning taxable income. Keep receipts to prove purchases.

2. Donate to Charity

Donations to charity or gifts may be tax-deductible if given to deductible gift recipients (DGR). Gifts can be money or property, as long as no material benefit is received in return.

3. Consider Salary Sacrifice

Salary sacrificing can reduce your taxable income. This involves an agreement with your employer to pay for items or services from your pre-tax salary. You can sacrifice for:

- Electronic devices

- Motor vehicles

- Private health insurance

- Superannuation

Most employers offer salary sacrifice to super. Check with your employer for other benefits. It's suitable for those earning above the $18,200 tax-free threshold, especially mid to high-income earners.

4. Hold Investments in a Discretionary Family Trust

High-income earners may benefit from a discretionary family trust, allowing income redistribution to family members in lower tax brackets. Trustees can distribute income to those with lower tax rates or no other income to utilize the $18,200 tax-free threshold. Capital gains can be distributed to those with capital losses or who can use the 50% discount. Franked dividends can be paid to those who can use imputation credits to reduce tax.

5. Create a Mortgage Offset Account

A mortgage offset account lets you offset non-deductible interest on your home loan with interest on taxable earnings in a deposit account. Interest is charged on the loan amount minus the savings account balance.

6. Pay off your Home Loan

Instead of saving, make additional home loan repayments. This reduces the loan's total cost and saves tax on interest earned in a savings account. Extra repayments can be accessed through the loan's redraw facility if needed.

Please contact us for further discussion.

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