3 Ways to Get a Tax Deduction (and Benefit in Other Ways)

3 Ways to Get a Tax Deduction (and Benefit in Other Ways)
  • 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

Hitesh Mohanlal

Director at WOW! Advisors & Business Accountants

14 years ago I lost a family member aged 38. I realised then there were important things in life than business and money. This tragic event drives everything I do. I am the founder of WOW! Advisors & Business Accountants, MediSuccess and CrystalClear Bookkeeping. I authored Double Your Profits and Halve Your Working Hours for Medical Practitioners.' I am Australia's leading Strategist & Business Adviser with a passion to bring smiles to the faces of medical professionals. As a result of the work I have done & based on my approach I has been recognised on Fox, NBC, CBS and ABC. Most business owners work long hours & recent surveys show that work life balance, income and wealth creation is the major area of concern. My ethos is to work with business owners improving their accounting and taxes but particularly to improve profits/ personal income and wealth whilst cutting working hours in half so that they can enjoy an awesome lifestyle with plenty of time for family, fun and philanthropy. I specialise in the medical sector. I have worked with over 3,500 businesses in Australia, America, UK, Japan and Europe. I soon realised that over 78% of business owners: - Found understanding figures too hard. - Were never taught how to run a business. - Spent money on areas they did not need to. - Paid more tax than they needed to. So we design strategies to specifically deal with the above but also: - Move business owners from being a business operator to a business owner so the business can run on its own. - Create investments, assets and wealth which generate income so that if you are unable to work or retire income is still generated. I am so passionate about saving tax and improving profit that since March 2019 for every $100 we save/ make for clients I am committed to make 20 impact across the world. Currently over 1,000,000 impacts have been made.