Money

Minimise your tax

Paul Clitheroe
Paul Clitheroe

TAX time is almost upon us, and while no one likes paying tax, you don't need to be rich or famous to minimise the tax you pay. Some simple and entirely legitimate steps could be all it takes to reduce your tax bill.

The first step is to claim all the work-related deductions you're entitled to. You can only claim the cost of expenses that relate directly to your job - things like briefcases for office workers or sunscreen for outdoor workers.

Special deductions are available for workers in certain occupations namely the airline, building and hospitality industries, and information on these as well as general deductions is available from the Tax Office website (www.ato.gov.au) or speak with your accountant or union representative.

One possible way to reduce the tax you pay is by taking out income protection insurance. This will provide a regular income stream if illness or injury force you out of the workforce. The premiums can normally be claimed on tax, and for a high income earner this can virtually halve the cost while also providing important protection for you and your family.

If the total of your deductions is over $300 you'll need receipts, invoices or similar written evidence for each individual deduction. You'll need to hold onto the paperwork for five years.

Don't forget to claim any offsets you're entitled to. These directly reduce the amount of tax you pay so they offer more bang for your buck than deductions, which only reduce your taxable income.

There is a variety of offsets available including the super contributions tax offset. This lets you claim 18% of super contributions up to $3,000 paid into the super fund of a low income earning spouse or partner. It's a great way to trim today's tax bill and boost tomorrow's nest egg.

Again, you'll need documentary evidence for any offsets you claim.

If you are preparing your own tax return, take the time to check back over your completed return. Simple mistakes can delay your refund or worse, make you a target for a tax audit. Common mistakes include forgetting to attach payment summaries to your return, neglecting to sign and date the completed return and failing to fill out the Medicare Levy section of TaxPack.

Even if your tax affairs are straightforward I reckon it's worth getting professional tax help, and you can claim the cost of the service in next year's return. Always check that you're dealing with a registered tax agent, which is something you can look up on the Tax Office website.

If you choose to do your own tax return, it needs to be lodged with the Tax Office by 31 October. If you are late and you owe tax, you could be slugged with penalties.

Our system of income tax relies on self-assessment, and that can make it tempting to fudge the numbers. My strong advice is, don't. Penalties can be imposed for even honest mistakes, and the consequences of deliberate tax evasion can be severe. The easy way to pay less tax is to earn less money. But who wants to do that? 

For more ideas on how to manage your tax take a look at my book Making Money.

Paul Clitheroe is a founding director of financial planning firm ipac, chairman of the Australian Government Financial Literacy Board and chief commentator for Money magazine. Visit www.paulsmoney.com.au for more information.

Topics:  opinion, paul clitheroe, tax, tax returns, tax time



Intrust Super Cup: Seagulls on a mission

Tweed Heads Seagulls are planning on a big run towards the finals.

'It's unlikely but you just have to win every match'

Father of Tweed club farewelled in touching service

The 'father' of Tweed Heads Seagulls Rugby League Club, Colin Hayes, was farewelled on Thursday.

Col Hayes remembered in tributes.

Surfer's shark tale: 'That's when it's come straight at me'

Pictured at Kingscliff this morning Rodney Clark has survived a Great White encounter.

"I lost sight of my son because a wave hit him"

Latest deals and offers

Drowning Pool gig review at Max Watt's

Drowning Pool played Brisbane with A Breach of Silence and She Cries Wolf at the Max Watt's House of Music.

Drowning Pool prove that 'bodies' hit the floor when they play

#SaveMarinaJoyce: How ISIS theory took over youtube channel

One young Youtuber accidentally gave rise to a conspiracy theory

Talking whiskey with Jack Daniel’s master distiller

It all comes down to the distillery

SIXTY MILES AHEAD sign with Eclipse Records, prepare new album 'Insanity'

Sixty Miles Ahead sign with Eclipse. Photo Contributed

Sixty Miles Ahead to release new album on Eclipse

Thy Art Is Murder are killing it

See Thy Art is Murder on their killer tour happening right now. Photo Contributed

We talk with Thy Art is Murder about touring, babies, and new music

Date announced for Prince tribute concert

A Prince tribute concert will take place later this year

Queensland's $1 town goes under the hammer today

The township of Yelarbon is up for sale.

Unprecedented auction of town's business centre with no reserve

Work starts on $15M Caloundra apartment building

Turning the first sod at the Aqua View Apartments site in Kings Beach are (from left) husband-and-wife developers Alex Yuan and Stella Sun with construction company Tomkins director Mike Tomkins and Councillor Tim Dwyer.

Developers excited about addition to Kings Beach skyline

Plans revealed for 1500-lot 'master-planned community'

Precinct will be bounded by Boundary St and Shoesmith Rd

Ecco Ripley sales run sparks prime release

MOVING IN: Sekisui House has announced the release of more residential blocks at Ecco Ripley.

Sekisui House is preparing to unveil more land at Ecco Ripley

Massive residential 9-storey high-rise hit by delays

An artist’s impression of the eight-storey-high apartment complex that Bernoth Holdings wants to build in South Toowoomba, next to the City Golf Club.

Developer struggles to get approved high-rise development started