According to the Australian Tax Office, you will be considered a highly-wealthy resident if your net worth is more than $5 million. Some of you might find yourselves in the category, especially the successful entrepreneurs and businessmen. But just because you are earning more, why should you pay more taxes?
Why just talk about the elites; every person who has taxes due wishes there were ways they could minimize the taxes they have to pay and save more. This is why this article will present 7 smart ways (legal ways) to pay fewer taxes when tax day is due.
1. Manage the Timing of Tax Deductible Expenditures:
Controlling the time of your expenditures is a smart way to increase your tax refund, although it may require you to make considerate decisions. For instance, if you plan to purchase a large tax deductible item, wait till the very end of the tax filing date to make the purchase. As a result, it will decrease your taxable earnings of that year and may even drop you into a lower tax bracket.
2. Pay off your Mortgage
Taxes are filed on the amount of savings you have by the end of each tax year. If you have been an avid saver this year, it might not as good news to you as you will be taxed more than those who didn’t. Strange but true! If you plan to buy a new real-estate property, why not pay off your mortgage using that money? The plus side – if you pay your mortgage, a hefty tax bill won’t stare at you by the end of the year. Besides, there are not many things as satisfactory as watching your mortgage loan getting lower and lower every month.
3. Make an Investment:
Making an investment right before filing your taxes can also help you reduce your taxes considerably. However, this is not the case for everyone. This is why it is best to get the right advisors on your side and see which investment will suit you best. Don’t think of investing in items that will only offer a short-term tax relief; invest in places that also promise healthy long-term benefits.
4. Be Good at Bookkeeping:
If you plan to claim any tax deductions, you need to have all the receipts with you. By law, every Australian is asked to keep all receipts, but it is best if you keep track of them too. It is the best way to ensure that all claimable expenses are claimed before the tax time is near. So, if you haven’t got yourself organized, start right away!
5. Make All Claims you’re entitled to Make:
Another smart way to increase your tax refund amount is to claim all your work-related experiences, such as transportation. You can always claim that the transportation purchased was, in fact, used for work-related travelling and request for a deduction in the cost. You can also make claims on items that you had to invest in, such as a laptop or any other piece of machinery that was used to earn a respectable income for yourself and your family.
Many people believe that donating to a charity is a nice gesture. But what if we were to tell you that it can also be claimable on your tax returns? Yes, it CAN be! Sounds like a definite win-win mate! After making any donations, you receive a receipt. When the time comes for filing your tax returns, all one has to do is mention the amount donated as charity. But don’t be fooled; the amount you enter will not come back to you as your tax refund. It will only be subtracted from your taxable income, which means you will get a percentage of it back.
7. Seek Help from Tax Advisors:
According to statistics presented by ATO, approximately 70% of all Australians take assistance from tax advisors. Get the right advisors to guide you on how to minimize your taxes and improve your net payable or tax refund.