It is never too late to start thinking of tax-saving strategies. The Australian Tax Office (ATO) has a very long list of deductions, but not everyone bothers reading it. This is a huge mistake. Every legitimate tax deduction you leverage saves you money. Here are some of the ones you may not have considered.
Gifts Made to Clients
Giving a gift to a client to thank them for their business is not unusual and it may even benefit you from a tax perspective. Whilst you can’t claim back gifts that are consumed immediately, i.e. a nice meal in a high-end restaurant, you can claim an income tax deduction on food and drink hampers, or even perfume. Any gifts that are taken away for consumption elsewhere are tax deductible.
Child Maintenance Trusts
Maintenance payments to children are not a taxable expense. However, if you set up a child maintenance trust, payments can be made from pre-tax income and trust income is taxed at rates applicable to a normal individual. Speak to an accountant for more information on how this works.
Home Office Expenses
You can’t claim home office expenses if you work from a kitchen table, but you can if you create a distinct space for your home office, e.g. a separate room. Various expenses are deductible, including light, heat, and cleaning costs.
Bring Forward Repairs
If you know you have some repairs due that are tax-deductible, bring them forward to save money on this year’s tax bill. This tax saving strategy is useful for landlords and property investors. For example, if one of your properties needs a new kitchen, complete the project before June 30 and add the expenses to your next tax return. However, make sure that you replace like with like, or it becomes capital expenditure and non-tax deductible.
Research and development expenditure is often overlooked, but it can be a useful area to exploit for tax deduction purposes. If you are growing a small business, developing new technology, or commercialising a venture, check out government incentive schemes to see if you can save money on your next tax bill.
Courses undertaken to help you in your business or trade are tax deductible. You can even claim the cost of your meals if the course requires you to be away from home for 1+ nights.
Lastly, always lodge your tax return on time. Penalties for being late are steep and will hit you where it hurts – in your pocket.
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