- When you complete your tax return, there are various deductions and expenses you may be entitled to claim which can reduce the overall amount of tax you need to pay.
- Most tax deductions are work-related and are expenses you've had to pay for in order to earn your income. For example, home-office and business travel expenses are tax-deductible.
- Read on to learn about three of the easiest ways you can get a tax deduction, while also benefitting in other ways.
Wouldn’t it be great if you could get a tax deduction and benefit in other ways, too?
Well, the good news is that you can.
How can I get a tax deduction?
Here are three things you may be able to claim a tax deduction for when it comes to completing your annual tax return.
1. Pay into your superannuation fund
This is one of the easiest ways to save tax. However, most people do not make the maximum contribution into their superannuation fund because they either forget or have financial constraints at the end of the tax year.
These are some of the ways you can benefit by paying into your nominated super fund:
- A great tax strategy: You get a 47% tax deduction and your superfund could pay 15% or 30% at the most. That is a minimum of a 17% tax saving - not bad at all. Your fund keeps a minimum of 70% of the money which you can use to grow future wealth.
- When you retire and take a pension the tax rate may be 0%: There are conditions, but many superannuation funds offer tax-free pension payments for people aged 60 and over that decide to take a super pension.
There is one thing I have noticed: many people pay into their super, but then lose interest.
This means they don't get a good insight into how well their super is doing. When was the last time you looked at and compared your growth rates with other superfunds?
Super will be one of your major retirement pots, so it makes sense to sit with your accountant or financial planner to see how it's performing.
All plants need water to grow. In the case of retirement, it needs a bit of your time to make it grow.
Are you feeding your investments with what they need?
2. Get your superfund to pay for your life insurance
Many people pay their life insurance under their personal name. Generally, life insurance is not that expensive but if you have large amounts covered, the premiums are usually higher than normal.
The problem is that if premiums are paid personally, then there is no tax deduction. Yep, that’s right, zero.
However, if premiums are paid via your superannuation fund then the premiums are tax-deductible by your superannuation fund.
To give you an idea, if you pay $5,000 a year in premiums you could get back $750. On the flipside, another way to look at it is that your personal bank balance is $5,000 higher because you are not paying it personally.
In order to earn $5,000, you have to earn up to about $10,500 assuming top rates of tax. It's a good win really!
But before you do anything, speak to a professional to assess what's best for you.
3. Take advantage of the instant write-off of $150,000
The instant asset write-off only works if you are in business.
Currently, the tax system allows you to purchase assets under $150,000 and write them off immediately.
But you do not have to spend a large amount. New phones, laptops and office accessories allow you to benefit from new gadgets, as well as receive a tax deduction.
But as I always say, only spend it when you need it and not because you want it.
And never spend on the basis that it will be tax-deductible, because you will still be out of pocket
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