Tax Tricks
Tax is inevitable; however there are thankfully measures you can take to minimize your tax liability. It is never a wise idea to undertake strategies and investments solely for the tax benefits, but to consider investments as part of your overall investment plan.
Superannuation holds tax benefits for people who know how to use it. These can include government contributions, personal contributions and undeducted contributions.
There is a Co-Contribution Scheme which is when the government pays $1.50 into your superannuation for every $1 you put in. This is limited to $1500 with a salary not less than $28,000 and there is a drop of 5c for each dollars over the threshold for co-contribution.
Other ways to minimize tax are to hold tax effective investments such as real estate. You can then using gearing strategies to increase tax deductions. For example, a negatively geared investment property is an ideal way to lessen your tax, however a positive geared property can increase your income.
Prepaying your expenses can also reduce taxable income. This is aimed at business owners and the self employed. You can prepay on expenses and then claim the deductions back against your salary.
Other strategies for tax minimization include selling your losing investments, utilizing tax managed funds, avoiding high turnover funds and stocks and tracking securities by tax lot.
Legal tax tricks are not a secret, you simply need the knowledge and a good accountant to take advantage of them.