The tax system can seem complicated and overwhelming. It’s important to have a team of experienced professionals on your side who can show you how to legally reduce your tax. Every person’s tax situation is different and at Vogue Financial Solutions, we can help you find ways to reduce your tax so that you can save money. Our number one goal is our customer’s satisfaction.
Common Taxes that People Pay
The amount of tax that an individual pays is based on various factors. The main tax that most Australians pay is the amount that is based off of the income that they receive from employment, investments, some government payments, business income, foreign income and capital gains, to name a few. The amount of tax is a specified amount based on the level of income. For example, if a person earns less than $18,200 per year, they are not required to pay taxes on that income. Income over $18,200 is taxed at a marginal rate, which means that the amount of tax goes up with the level of income.
Once a certain level of income is reached, there’s a flat amount of tax owed, plus a set amount of cents per dollar. For example, if a person makes $38,000 per year, they are taxed $3572, plus 32.5c for every dollar over $37,000. Vogue Financial Solutions can assist you in determining your tax rate so you know what you can expect to pay and what your employer should be withholding from your income.
On top of the marginal tax rate, many people are also required to pay the Medicare levy at a rate of 1.5% of your taxable income, which goes towards paying for the public health system.
Common Tax Deductions and Offsets
The Australian Taxation Office (ATO) determines what types of deductions and offsets an individual may be able to take based on their specific income and tax situation. Not everyone will quality for deductions or offsets, which is why it’s important to seek tax assistance, to make sure that you’re claiming the appropriate deductions and offsets. Common deductions and offsets include:
- Charitable donation deduction
- Work related expense deduction
- Expenses you incur for self-education
- Home office expenses
- Cleaning expenses for work uniforms or clothing
Offsets work a little bit differently than deductions. When you claim deductions on your taxes, what you claim reduces the amount of tax owed before tax is calculated. With offsets, your total tax owed is calculated and then the offset amount is reduced directly from that amount. Common offsets include:
- Dependent offset
- Low income earner offset
- Pension and senior citizen offset
- Offset for income you’re receiving from a superannuation
The deductions and offsets listed above are only a few of the most common examples of where you may be able to save on your taxes. What you’re allowed to deduct or offset is dependent on your specific circumstances and income. We will review your specific situation and explain how deductions and offsets work.
What is Salary Sacrificing?
Another way that you may be able to potentially reduce your tax is through salary sacrificing. Salary sacrificing means that you “sacrifice” part of your income and place it into a super. By putting some of your salary into a super, it may qualify you to receive a tax reduction. One of the major advantages of salary sacrificing is that you may be able to receive a tax benefit, while also putting more money into your super and helping you save for retirement.
Why It’s Important to Have Professional Assistance with Your Taxes
It’s up to each tax payer to make sure that their taxes are completed and submitted properly. It’s also incredibly easy to misinterpret the tax regulations or make honest mistakes when completing your tax return, which can result in costly errors. Other situations that can further complicate your tax situation include:
- Owning one or more investment properties
- Capital gains and losses
- Owning a business
- Having a lot of work related deductions
- If you work out of your home
Let’s look at a scenario where an individual owns and operates a business, but they do so from their home office. Part of this individual’s expenses related to the home may be related to the business, while other expenses are personal. For example, the Internet connection may be used for both business and personal purposes, but what’s the proper way to divide that and any other expenses between business and personal? In addition, your home is typically exempt from tax, but if you run a business out of it, there may be taxes involved based on your specific situation. This is just one example where it’s best to have professional tax assistance on your side. How you calculate or claim certain deductions can have a major impact on your taxes.
Property Investors and Taxes
If you invest in property, there are a variety of tax regulations that you must be aware of when you lodge your tax return. Vogue Financial Solutions can help you determine what property investment expenses can be deducted, potentially reducing your tax.
How We Can Help Reduce Your Tax
At Vogue Financial Solutions, our goal is to find ways to legally reduce your tax. We will review your income, expenses and unique circumstances to make sure that you’re getting all of the deductions and offsets that you’re entitled to.
Even if you’ve lodged your own tax return in the past, it’s never too late to start looking for ways to save. It’s quite common to miss deductions and offsets and it may be possible that your financial situation has changed, therefore changing your tax circumstances as well. It’s always important to have a professional thoroughly check over everything to make sure that the return is accurate and that you’re not missing the chance to reduce your tax.
Contact Vogue Financial Solutions to see how we can help you reduce your tax. You’ll receive superior and professional service from tax professionals with years of experience in the industry.