In order to save tax in Australia, you need to follow these strategies:
- Choose the right Business Structure (Sole Trader/ Partnership/ Company/ Trust)
- Claim all the Tax Deductions such as Travel Expenses, purchase of essential equipment or depreciation of expenses)
- Claim a tax offset (If you’re a sole trader, partner or trust beneficiary of a small business with an annual turnover of less than $5 million, you may be able to claim a $1,000 tax offset to lower your tax liability.)
- Claim a deduction for the unrecoverable income (Bad Debts)
- Claim Depreciation deductions for machinery and work vehicles in case of some business assets.
- Offset income with negative gearing – As an individual, if you own a rental property with costs that exceed your profits, you can deduct your losses from your taxable income. And if you know that you’ll take a loss on your rental property in the financial year, you may be able to apply for a PAYG withholding variation, which decreases your withholding throughout the year.
- Make charitable donations in order to claim those expenses as deductions.
- Purchase private health insurance – If you earn more than $90,000 per year and don’t have health insurance, the ATO will levy a Medicare surcharge of 1-1.5%, depending on your total income.
- Use Accounting Software – As a business owner, keeping track of all your expenses and every possible tax deduction can be difficult, but when you use accounting software all your key financial information is stored in one place. You can also use your software to manage tax and basic reports, track GST and lodge BAS.
- Pay all the employees, Superannuation by the deadline – If you have employees, you can claim a deduction for Superannuation Guarantee contributions.
- Consider longer-term investment strategies that include borrowing money to buy residential property, business and shares.