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TAX TIME: planning to reduce your tax

tax planning before and after

Do you often finding yourself in a last minute dash to maximise your tax refund during tax season?  Why not take the opportunity to do something different this time… like start planning now! After all the amount of tax you pay is something that’s decided with every decision you make, 365 days of the year.

A few simple ways of managing tax include:

  1. Deferring income until the following tax year – such as arranging a fixed deposit or other investment so that the income from the investment is paid after the end of this tax period;
  1. Bringing forward expenses, which will not generally accrue until the next tax year. An example of how this works is when interest payments on a tax deductible loan is paid in advance;
  1. Income protection – Insuring your income will protect the lifestyle of you and your family and the premiums paid are tax deductible!

There are many other options available to maximise your tax refund. The success of these options is depend upon your:

  • Employment status. ie. If you are self-employed as opposed to being an employee.
  • Are you able to salary sacrifice some of your pre-tax income into superannuation?  Bolstering your retirement savings and potentially reducing your tax payable. (conditions apply)
  • Family situation – There are tax advantages for making a contribution toward a superannuation fund in your spouse’s name. (conditions apply)

These ideas are in no way comprehensive, it all depends upon your personal circumstances, but one thing that is common to everyone is that the longer you leave these plans, the less benefit you may receive. Don’t make the next tax time another last minute dash!

For more information about tax planning or if any of these strategies may apply to you, please speak with a Modoras Accountant on 1300 888 803.

This article is published by Modoras Accounting (UMG) Pty Ltd ABN 81 601 145 215. This article contains general information only and is not intended to represent specific personal advice (Accounting, taxation, financial or credit). While every effort is made to ensure that the information is accurate, users must be aware that some information may not be accurate or is no longer current. No individual personal circumstances have been taken into consideration for the preparation of this material. It is recommended that you obtain your own personal professional advice before making any financial or business decision.

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