Minimising Your Tax Bill

Google+ Pinterest LinkedIn Tumblr +

1. SPLIT YOUR INCOME – Put all bank accounts & other income producing investments in the name of the spouse that is in the lowest tax bracket. Interest earned from savings accounts, fixed interest & government bonds are taxed at the same rate as the investor whose name it’s in so the person in the lowest tax bracket won’t get taxed as much on these as a person in a higher tax bracket. The tax office splits the interest earned on joint accounts & applies the tax rate of each individual to their share. Income splitting is becoming popular & attractive in families where there is one primary income earner as the other spouse can earn up to $6100 tax free.

2. HAVE YOUR TAX ADJUSTED – If you think you are paying too much in tax, apply to have it adjusted. Interest rates on average are lower than what they were a few years ago & because of this, many people – particularly retirees – have seen their interest income cut sharply. The problem is that the tax department automatically assumes that you will earn the same amount of income from savings & investments as last financial year & tax you based on this assumption however, you can apply for a variation& these forms are available from your local tax office & online at

3. SELF EDUCATION – As a rule, you can claim a tax deduction for the costs of self educating as long as it’s related to your income-earning activities. Self education is mainly associated with courses run by schools, colleges & universities that award a degree or diploma, however you don’t necessarily have to come out with a certificate to claim a deduction, you just have o be able to prove that the skills & training you’ve had are sufficiently related to your job. The objective of this is that upon completion, the course will help you get a pay rise or promotion.

4. PAYOFF DEBTS!!! – This would have to be the best tax tip. It seems a bit silly to invest spare cash & pay tax on the returns when at the same time you are paying interest on your loans. Just think, if you have a credit card or a personal loan, you could be paying up to 16-18% in interest on the balance &sometimes more. Invest spare cash while you still have a loan & the best you can earn is 4 – 6% in interest & then you pay tax on those earnings. By using your spare cash to pay off your debts, you will be saving yourself from paying out more than 10% in interest.

5. OFFSET CAPITAL GAINS WITH LOSSES – Profits on selling shares, property or unit trusts purchased after 1985 will be charged capital gains tax (CGT). CGT is based on half of your marginal tax but any losses made on these investments can be offset with profits. So if you have made a big profit on an investment, sell your disasters because the losses will be offset with the profits & your CGT bill will be cut.

6. THE PAPER TRAIL – Many jobs demand spending money on unusual items which are necessities to earning an income. The cost of these items can be claimed against tax & are called work related expenses. Be careful as the tax office studies these closely so keep all your receipts & these expenses must directly elate to earning an income. These can be things such as work boots, laundering, dry cleaning, travel, fuel, etc as long as it’s in your job description.

7. KEEP ALL TAX RETURNS – Well not every single one but it’s best to keep the last 5 years worth. The tax office likes to audit people every so often so to keep out of trouble, keep the last 5 years. If you don’t & get audited, you can be in serious trouble.


About Author

Leave A Reply