Easy steps to reduce your tax
There are three main areas to look at ahead of the end of the tax year:
– making superannuation contributions;
– pre-paying expenses to reduce taxable income;
– using tax-effective investments or gearing strategies to increase your tax deductions.
Depending on your personal circumstances, you can take advantage of a number of super strategies such as undeducted contributions, government co-contributions or personal deductible contributions.
Undeducted contributions, for example, are where you contribute money into your super from your post-tax income. No further tax is deducted when paid into the fund and it is also tax free when you take it out. Then, any earnings you make on those investments over time will only attract 15 percent tax. This translates to a tax saving of up to 33.5 percent if you are on the top marginal tax rate and over the years can make a substantial difference to your eventual sum.
Or if you are eligible you might want to look at taking advantage of the Government’s co-contribution scheme.
Prepaying your interest on an investment loan up to 12 months in advance so you can claim the deductions against this year’s salary. You can also prepay other work-related expenses.
Tax-effective investments such as Agribusiness & Primary Production. Please check the ASIC website for such rulings.