The New Year is upon us and taxes we must pay, as the law so demands. Frankly though, for most of us, if we had a choice, paying tax could never have been on our budget. But life is never fair enough or is it?
Did you know that there are a number of ways in which you can actually pay less tax regardless of where you live? That’s true. Whatever the jurisdiction, government systems allow citizens to get refunds or even have their taxes subsidized. But it takes some knowledge for you to know how to go about it. Some of that stuff requires technical advice for you to know how and when to hit. Here are a number of ways in which you can pay less tax at the Australian Tax Office (ATO).
Know your Tax Residency.
Are you a resident or a non-resident taxpayer? Knowing the category you fall in helps a great deal in determining the amount of tax you pay. It also determines whether you get a refund and actually how much refund you eventually get. If you are a temporary visa holder entering Australia, you are supposed to pay the taxes according to the non-resident tax rate for the first six months. By so doing, you will as well be complying with the Australian tax law. Doing this ensures that you don’t have tax arrears that might attract a penalty by the time you depart.
Make a claim for Superannuation.
Sounds new to you? It’s simple. For people in formal employment, a percentage of your salary is put aside and paid as pension upon retirement. But you might not stay in Australia until retirement, right. In such a situation, you are entitled to a refund. Of course, there is a process through which you apply for superannuation and you can do this as soon as you permanently leave Australia and your visa has expired. In fact, you can have your visa canceled to help you apply for superannuation. How does that sound?
Exemption Through Medicare
Taxpayers in Australia partly fund the universal health care scheme known as the Medicare levy by remitting 2.0% of their income which is within taxable limits. This fund allows Aussies and selected nationalities including Britons and Italians to pay very little or no money at all for healthcare.
There are people, including foreign nationals, who are exempted from paying this tax. The problem is that most people are not aware of this and therefore the levy continues to be deducted. People earning more than $20,542 in any fiscal year are eligible for a Medicare levy exemption. All you need to do is and submit a Medicare Entitlement Statement attached to the tax return application and the process should be done within about 10-12 business days.
Are you earning Bank Interests? Let the taxman know.
The Australian Tax Office (ATO) keeps an eye on interest earned through your bank transactions. In the event you fail to declare this, you can be certain that your tax refunds will be delayed. We are sure you don’t want to continue having your refund held when you could avoid it. Simply disclose any interest earned on your yearly tax return.
Get Refunds on Work-Related Expenses.
In order to lay claim for a tax refund on work-related expenses, a number of conditions must be met;
- First, you must be the one who paid for the expense and reimbursement wasn’t done
- The payment must have been related to the job. (They may include items such as travel, equipment bought, tools, RSA and RCG courses among others).
- There must be evidence either through receipts or otherwise to showing that indeed you made the payment.
Got Mortgage? Pay it off.
This one actually applies almost universally. Paying off your mortgage (and other debts as well) might help you reduce your tax bill. This one works well if you are able to align your earnings with your savings. The sooner you are able to settle it off the easier it gets.
Be Very Keen When Selling and Buying Assets.
The devil is surely and literally in the details when it comes to buying and selling off assets. Do you know how much tax applies to each transaction? Be very careful to read and understand what is applicable in individual cases. In addition, understand your obligations and those of the other part with whom you are doing business.
Align Your Finances With those of your partner
It is possible to have instances where the taxes you and spouse pays can be compounded so that you aren’t taxed twice. For instance, if you run two parallel accounts for a similar project, it might make things easier to run just one account. Seek assistance from financial advisers such as TW Accounting Gold Coast Accountant to guide you through.
Clear Bad Debts ASAP.
Bad debts are not only unfortunate bad to personal life but also for business. The ATO has a provision that gives you some relief allowing you to write off some bad debts. It has some conditions though but you can still get tax relief.
Income Tax Refund.
We just had to have this right at the bottom even as obvious as it might sound. Tax refunds as demonstrated through the discussion give big relief to all of us. A lot of factors such as the period you’ve been living in Australia and even the amount you earn might determine how much tax you pay.
You have some options at hand. What matters is how you use them. Notably though, navigating through the tax maze requires some knowledge. It is advisable that you work closely with a tax adviser or financial adviser of your choice.