You’re probably just about to open your group certificate via email or Trevor in payroll gave it to you in a sealed envelope. That sum at the bottom says that this year you paid the federal government 10, 20, 30k in tax. Like most people you feel upset, probably a little disappointed and wonder how much better life would be without paying tax. In theory, we know this can’t happen, but it can be reduced.
Salary packaging can reduce your taxable income if it’s applicable to your situation.
If you live in a regional area of the country, you could be eligible for a 50% tax reduction on your rental costs.
This is something you normally spend your net income on. By claiming your rental costs as a salary packaging benefit, this means you pay less tax, take home more money and get more out of your pay. You could even pay 100% of the mortgage interest on your home as well however this will incur a small amount of Fringe Benefit Tax (FBT) to be paid as well.
This could get you up to 2-5k back in your pocket and not on the bottom line of a federal government donation.
Perhaps you have just moved interstate from work with a big promotion, did you know that you could claim up to six to twelve months rent tax-free? And on top of that, you can also claim all of the costs of moving and selling your old house. Yep, that’s right. The astronomically exorbitant rate of commission that you paid to a real estate agent has just become an exempt benefit item and lowered your taxable income. No one likes paying 15-20k to a bloke with a Mercedes and Rolex, for him to stick an ad online, speak to a few people and then sell your house in 15 minutes flat. It’s highway robbery in my mind, however, the moment you get 5-7k back in the bank from the tax benefit will help soften the blow a little.
Simply by paying your rent pre-tax, you can get another 5-20k from the remote area benefit.
Now that’s a winner, winner, chicken dinner idea. Take the promotion, get the deduction and pay less tax.
So, should your accountant know about this stuff? Yes, they probably should, but Graham, Silvia or Barnaby are generally too busy lodging returns and BAS documents for local businesses to worry about you, the employee. All he or she wants are the large business clients that they can advise to and make thousands from rather than the $90 to process your tax.
Our staff at SPA help you sensibly and legally minimise your tax so you don’t pay more than you should. To find out your potential benefits click on one of the calculators below or give us a call on 1300 786 664 and we can run some scenarios in order to work out what you shouldn’t have paid this year so you don’t get stung.
In the words of Kerry Packer, “Now of course I am minimizing my tax and if anybody in this country doesn’t minimize their tax they want their heads read because as a government I can tell you you’re not spending it that well that we should be donating extra“.
Don’t donate to a politician’s paycheck, work out what you can do to stop paying too much. If you can’t take a few minutes to work out what you can do to save, you probably need to take KP’s advice.