It’s tax time! But that doesn’t mean it’s time to stress.
In fact, according to Aero Accounting director and PAQ Group founder Justin Wong, the most important part of your money is how you actually spend your income. How you manage and pay your tax should simply complement this.
Justin says the first thing he does when he takes a look at somebody’s finances is ask to take an in-depth look at their situation, identity the core issues and subsequently provide referrals to the right people.
“Even when you have youth on your side, it can be really helpful to sit down with an accountant and ask those burning questions that you have,” he says.
“A lot of the time, a client’s first question is going to be, ‘How do I save more tax?’ or ‘Can I deduct XYZ?’
“Both of these common questions require a quick look at somebody’s finances to see what they do.”
When it comes to preparing for tax time, Justin urges people to consider what they can claim as tax deductions for their specific profession, and to take their time going through the ATO’s website for legitimate and sound advice.
One strategy Justin encourages people to consider is to carry forward their concessional contributions to their super fund.
“As a disclaimer, I recommend everybody gets their own individual financial advice from a professional,” he says.
“Every year, everyone has a cap on what their concessional contributions into their super fund are. It’s currently $25,000, but will soon be increased to $27,500 next financial year.
“If we consider someone who might have started off on a relatively modest salary, but quickly starts climbing the ladder, they can carry forward the unused concessional contributions from the previous five years.”
People can then make a personal contribution into their super fund and claim this as tax deductible.
You can check your available concessional contributions cap via your myGov account.
Justin says that in some cases he suggests people who are on a high income consider elements such as appropriate cover via private health insurance to avoid paying the Medicare levy surcharge, or income protection insurance.
For people who work for a not-for-profit or large corporation, Justin explains there is the possibility of salary packaging which can enable employees to reduce their taxable income.
“You have to seek guidance from your employer to see if it is a possibility because it’s not something all employers can actually offer,” he says.
Justin says another strategy he advises people to consider is making donations to community causes they feel strongly about. Anything above $2 given to a deductible gift recipient, and as long as a record is retained, can be tax deductible.
Pursuing further education that is relevant to a person’s current job, or negatively gearing an investment property can also be relevant for high-income earners.
Justin encourages people to consider negative gearing as a good strategy for building wealth and saving on tax. He says you can’t underestimate the importance of a tax depreciation report, either.
He advises that if people are going to do their tax return alone, there can be quite significant issues.
“It’s either underclaiming or overclaiming, both of which can be damaging,” says Justin.
“Claiming too much means you might end up being audited, but it can be equally as annoying to find out the year after if you chat to an accountant that you could have paid less tax.”
Justin encourages individuals to exercise the complimentary 15-minute initial consultations Aero Accounting Group offers so their questions can be answered. Business owners have the option of spending 30 minutes.
Book your session with Justin Wong or one of his colleagues today, or check out Aero Accounting Group‘s new streamlined online client portal which offers a secure place for document uploads.
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