Tax saving is an essential exercise for wealthy individuals as their income stream gets wider. Tax planning is an integral part of the tax-saving exercise so that excess tax payment could be avoided. More consideration is given to the tax-saving plan, and better results could be achieved. Tax avoidance is legitimate and allowed in every state of the world, as long as no falsified claims were made to conceal the source of income and payment of less tax, or vice versa.
The total amount to be paid to the tax authorities depends on the tax law and tax rates of that particular jurisdiction. Do you want to know how to pay less taxes without getting in trouble with the authorities? Sound knowledge of tax practices, relevant laws, and regulations is required to effectively plan your tax payment to save a larger amount of tax. A knowledgeable and professional approach of a tax consultant is highly recommended to manage your tax base.
There are various ways of saving tax that include the distribution of income among family members. The least complicated method lower tax rates of lower income earners could be best utilized in this regard by establishing a family trust in favor of beneficiaries.
Another way of paying tax at at reduced rate is by setting up a company to pool up an individual and family income so that the tax liability will be applicable at the rate of 30% as per Australian corporate tax rates. By doing so, tax savings of at least 15% approximately could be obtained along with the separation of ownership and control.
Donating to charity is always a good thing but what makes it even better is that the amount you donate is claimable on your tax return. That is a win-win. Your donations do not come straight back onto your tax refund. The amount is subtracted from your taxable income, which means you get a percentage back.
If you don’t have private hospital insurance and your income is more than $90,000 for singles or more than $180,000 for families, you will pay a minimum of 1% Medicare Levy Surcharge. That’s on top of the compulsory 2.0% Medicare levy paid by most taxpayers.
A basic private health cover plan can cost less than 1% of your gross income – less than the Medicare levy that you’ll pay if you have no insurance – and that’s why private cover may be worth a look. (Plus, private health cover has some other advantages like shorter waiting times.
Thousands of people miss deductions they could have claimed every year. That’s millions and millions of dollars that the ATO keeps, where people could have got it back in their tax refunds. Tax residency status is also a unique method, so the foreign proceeds’ tax liability could be minimized. Investing outside of Australia could also bring some tax benefits by making foreign investments and paying less income earned from a foreign source of potentially claiming double taxation relief.