Legal Ways to Minimise Tax - Discussion

A few days ago I posted a thread to discuss whether fines should be income tested and have seen some very valid points around rich people using strategies to minimises their tax so they barely pay any tax to ATO.

So I am starting this thread to see tax saving/minimising tips from fellow ozbargainers.

I think it's fair I start this thread with my own tax minimising tricks

  1. I don't have a work supplied phone so I claim 50% of usage as work based. (I landed at 50% based on usage pattern over 6 months)
  2. I claim work related expenses (from memory I don't need receipts for combined expenses below $150 e.g. laundry)
  3. I also work from home in the evening most weekdays and some weekends as well as some full weekdays. So I claim 25% of home broadband as work related expense. (Again based on the usage patterns over a period of 6 months)
  4. If I buy a technology devices such as a laptop or a tablet (my work allows us to bring our own device to work) e.g. this FY I bought a surface pro 4 so I plan to claim tax deduction on it.
  5. I do my own tax so I don't pay an accountant. If I did tax through an accountant then I claim their fee the following year.
  6. Work related study. I didn't do this in the recent past but when I did I claimed deduction (once I even got private ruling from ATO to ensure eligibility)
  7. Interest (after expenses) and depreciation and other related costs for investment property (I currently rent to live)
  8. I don't have any other work related expenses that I can claim.
  9. Save money in mrs name as she is on lower tax bracket so tax on interest is lower
  10. I claim child care rebate of $7500 a year, last year total cost was around $33k for one child. (not eligible for CCB)

So what other ways do you save on tax?

Comments

        • +18

          @unclesnake:
          Thanks unclesnake. I'd love to hear if your wife has any details. I didn't know charities would give receipts for donations - but maybe there is something I am missing that she knows.

          As for property, it's always a great time to buy a house in Australia, just ask any real estate agent!
          I think the most likely thing in the next 5 years is house prices will do very little. Maybe down and up and down a bit. If unemployment goes up dramatically (thanks to a China crash, say) or other economic headwinds hit, house prices could drop - but in such a circumstance banks wouldn't want to lend you money so it is no benefit to you.

          I used to think my stroke of genius was living in cheaper places so we could pay down the mortgage quicker. Sadly, it turns out I should have taken the biggest mortgage I could afford, and then doubled down every three years for the last two decades. It irritates me that my prudent financial decisions have been so massively dwarfed by the house price speculation monster. When we bought our first flat in 1997 we joked that the bank would lend us $350k (we spent $180k). If we had taken that loan and done nothing else, we would have a nearly paid off $1.5m house. But it was a stupid amount of leverage then - even though it would be considered incredibly conservative for a first home buyer now.

          So my advice is to buy a home you will be happy living in for a few years. Worst case is it drops in value - big deal, you have a roof to keep the rain off, just keep paying the mortgage. Regardless of what property prices do in the mean time, in 25 years you will own your home and not have to care about rents or interest rates. If it turns out property prices drop a lot, buy an investment. If they don't, use any excess cash to pay down your mortgage. As a renter, you have a precarious existence, you can't bang in a picture hook or paint a room a colour you like. Owners have responsibilities and costs, but you need to accept them one day because you don't want to retire with a fixed income but escalating housing costs.

        • answered further down

        • @mskeggs:

          Super reply. Love it.

    • +3

      CA here:

      1) You are correct about the laundry
      2) No this is simply is not correct. You can only claim a donation if it is going to a DGR Charity. And it must be cash. There are a few areas where this differs but clothes certainly is not one of them.
      3) The tax offset is correct however its very rare i come across it.
      4) If you can afford to pau the extra into your super then do it for sure!
      5) Bucket appeal: I cant recall the exact figure but I believe it is around $10 or $20 however I rarely include it as the refund on $10 simply isnt worth the time
      6) Motor vehicle expenses and conference expenses are all fine but if you claim a reasonable amount and your job title doesnt tie in with traveling then dont be surprised if the ATO audits you.
      7) Not sure what to say to this as its not an area I have dealt with greatly. What you say is correct but im sure there is downfalls to this set up which I cant quite recall!

      • 2.) ok im not sure about this, but a CA would know, so lets scrap that. My Wife said it was fine, but i couldn't find anything to support it.

        3.) do you mean rare as in many people don't do it? i only just read it recently, seems a nice little earner, is an 18% return really

        4.) with 4 my work allows us to change sacrifice amounts each month pretty easy either as a perm or fixed amount. I work the first 9 months f the fine year as normal with no deduction, then if i've survived being made redundant, i smash the last 3 or so pays into super. is bloody hard, but hopefully i survive to 60 and it pays off. If not my kids.wife will have it.

        here is a question for the CA

        if I attend a users group which is just nerds gathering at sizzler on a friday night once a month to talk IT stuff, is this considered a conference? i doubt it

        • if I attend a users group which is just nerds gathering at sizzler on a friday night once a month to talk IT stuff, is this considered a conference? i doubt it

          (I am not a CA but …)
          I think that is reasonable to claim expenses associated with participation. Travel & parking would be reasonable, but not food & drinks.

          The ATO audits individuals that exhibit anomalies in their tax return based on their income levels & industry they work in. $50k of self-study/work releated education expenses on a anywhere between $80-$200k of IT income, you increase the chance of audit. A few thousand? Less likely. In either case, it is up to you to substantiate any claim, so you can't just wing it, you either have to know the relevant tax law (or helpful guides from ATO about specific areas of expenses), or you use a CA, whom you trust gets it right (but won't be liable for any errors).

        • 3) Yeah just rare as few people have the cash to actually do it.

          Regarding the user group - I would say its too informal to be classed as conference.

          A conference usually has fees to attend and is run by some form of business or professional body.

          In my view it would be very hard to prove that some beers and a bbq are vital for you to keep up to date with tech news etc.

        1. Yes you can only claim a tax deduction if your gift is towards a DGR, but a "gift" does not simply have to be made in cash.

        As per ATO website:
        - $2 or more (monetary gift)
        - Property we value at more than $5,000
        - Property purchased during the 12 months before making the gift
        - Shares valued $5,000 or less
        - Trading stock
        - Cultural gifts program
        - Heritage gifts

        Although these do not apply to OP, just wanted to state that it does not necessarily have to be cash.

    • you can put $3000 post tax into your partners Super, and u get a $540 tax offset.

      This is only possible if the partner earns below the threshold, currently $10,800 for maximum offset, phasing out if they earn more than $13,800.

      But the good thing is it's a tax offset, as opposed to a tax deduction. A tax deduction only reduces your taxable income. But a tax offset is basically like they count $540 extra tax having been paid.

      https://www.ato.gov.au/Individuals/Tax-return/2015/Supplemen…

  • +3

    Interesting topic.

    I claim home office expenses including a percentage of utilities/insurance/rates etc. as I work from home several days per week and I have a dedicated office. I do not claim against finance costs for the mortgage, as I do not want to trigger a CGT liability (although I did claim a portion of the rent when I was a renter).

    I have debated whether travel between my home office and work is deductible. If I work a part of a day at home, and a part in the office, it definitely would be, but I tend to usually do one or the other. So I do not claim the travel. The exception is if I break my routine and attend a training/meeting/etc. somewhere when I would usually be working at my home office. But this is rare.

    I also claim a cellular internet dongle as 100% for work as I use it on the train commute rather than running down my mobile battery and plan data.

    A couple of claims my tax agent has suggested that could be valid that might not have been things I would have thought of:

    • luggage purchased for a business trip
    • a briefcase
    • home office fittings and furniture
    • membership of work associations
    • subscriptions to work periodicals
    • un-refunded meal expenses when travelling for work
    • travel expenses related to investments (e.g. rental property inspection)
    • +4

      Oh dear.
      I just realised I claimed this was an interesting topic.
      I apologise.
      You have seen the depths my boring personality can plumb.
      In my defence, I kind of see tax planning as a puzzle to solve.
      But I wouldn't want to do it more than once in a blue moon.

      • +5

        Meanwhile, at the grass growth monitoring thread

        interesting topic

        -mskeggs

        • Hey, it's no paint drying.

    • Rates are out if you are an employee working from home as it's an occupancy expense.

  • +5

    bring your multinational corporation into australia. claim that all income is offset by "research and development" to offset any tax. - thanks starbucks.

  • +3

    Anyone work as accountant for ikea? I heard they don't pay a cents to Australia tax office. We need insider story.

    • +2

      ITs due to the strange set up they have over in Sweden where they head company is essentially set up as a charity that can distribute back out to the owner.

      Totally disgusting to be honest.

  • +2

    1) Inherit large corporation in the media or mining industry.
    2) Have lunch and dinner with politicians while giving hints of a wink wink nudge nudge "You help me, I help you" symbiotic relationship (though some may call it parasitic but a rose by any other name…).

    If politician/political party is not receptive of your requests, go to 3)
    If politician/political party is receptive of your requests, go to 4)

    3) Launch attack via marketing/media on the politician/political party until you get the results you want.
    4) Tax laws have been amended in your favour.
    5) ???
    6) Increased profits.

    • +2

      Probably timely to mention -

      Contributions and gifts to political parties, including membership fees, may be claimed as income tax deductions.

  • +1

    Careful now, if everyone minimised their tax contributions the government might have increase taxes.

    • +2

      Or they could stop wasting our money on bullshit

      • If only they had the brains or integrity to do that!

  • I have been recently thinking of purchasing a Qantas frequent flyers lounge membership ($510) and hoping to claim it. Just flew home today from a work trip and was delayed 3 hours and a rest in the lounge would have been perfect. Work won't pay for it so have been thinking of this in a while. I've read mixed opinions on this. Anyone had experience of successfully (or unsuccessfully) claiming for this and the rationale behind it?

    • It might be hard to claim as it is more of a luxury than a necessity. Normally if it was required, work would pay for it. I think since it is not required for your job, you can't really claim it (seems to be a general rule of thumb).

    • CA here:

      As brezzo mentioned its a luxury item and it would be incredibly hard to prove that it was 'required' in order for you to do your job.

      If you were delayed further then you would have likely got a hotel room and your work reimbursed you for it.

      Being delayed isnt a good enough reason for a lounge membership.

      think of it like this - when people are stuck in traffic jams while travelling to work are they able to claim for the extra fuel it cost them to get there - No as travel from home to work is non deductible.

    • +4

      I have quite a number of work colleagues that claim Qantas club membership as a tax deduction. If you go there and open up your laptop and to some work and make some work calls why would it not be a work related deduction?

      • Hence my initial comment that I always see mixed responses to this question - some say it can't be done and others say they have done it. I know that if I go into the lounge I will be opening up the laptop and working while enjoying a drink and a feed. I don't do that while I am stuck in traffic - except the eat part :)

  • +1

    Tax minimisation for individuals is pretty much non existent.

    Accountants treat individual tax returns like dirt because it doesn't earn them good money. The $$$ are earned from doing partnership, company and trust tax returns.

    If you have a business most definitely would use an Accountant as you minimise tax a fair bit, simply by the structure.

  • +3

    move to the gold coast,

    tell centrelink you have schitzophrenia, get disability pension.

    move into share house in palm beach

    take up cash in hand job with some one called wazza, doing handy man work for a flat 20 an hour.

    gross income 1200 a week

    expenses

    100 share house
    20 on food
    180 on weed

    net 800 a week

    seems I am one of the 10 percent who work here

    • +1

      That is 60 hours of work per week!!! Bugger that!!!

      • nah 400 is ur disability pension

        • +1

          That's better!!!
          Let those taxpayers suckers pay for a great lifestyle!!!
          Australia really is the lucky contry ;-)

        • +2

          @maxi: man i know so many blokes on disability pension, and all they do is smoke,drink, play keno, play the dogs, and then complain when you go on holiday

        • @unclesnake:
          Morally wrong, but clearly they do not care about that. They get the lifestyle they like and someone else paying for it. They are not really hurting anyone, just taking advantage of the circumstances.
          Cannot completely blame them. The real fault lies with the system and the government allowing that to happen.

        • +2

          @maxi:

          Your last sentence makes no sense. It is virtually impossible to change the welfare system in Australia.
          Look at this:
          http://www.abc.net.au/news/2016-01-11/disability-support-gro…

          Everytime a govt opens the can of worms that is welfare, every lefty media organisation goes out and has a field day. The modus operandi usually looks like this:

          • Blame the govt
          • Find one example of how the change will negatively affect a genuine person (because a sample of one is reflective of the 800,000 on DSP - are you surprised that out of 800k recipients, a few genuine cases might slip through the cracks?)
          • Oh and conveniently ignore that the problems the genuine person is facing are under the current system, not even under the reformed system. Don't let people know that!
          • Make sure there is a picture of said person, creates a personal connection
          • Get someone from ACOSS to say something bad about the changes (welfare lobby group, no idea how they exist but anyway)
          • Get some other disability advocates to more bad things about the changes
          • Throw a couple of extra kicks at the govt
          • For balance, give the govt a few lines down the bottom. BUT make sure the real reason the govt pursues welfare (cracking down on welfare fraud and encouraging those with borderline or minor disabilities are encouraged into what ever work they can actually do) is never mentioned - some idiots in the electorate might actually think that makes sense.

          Genuine reform in this country on pretty much any issue is exceptionally hard today in the age of gotcha journalism, lobby groups and the electorate's sense of entitlement.

    • -1

      Think your clever with that comment i bet.

  • Net is $900 not $800.
    Sure you are in the 10% ?

    • its saturday, I am high

  • +2

    If you work from home - you should be claiming rent / mortgage repayments 25% as well as interest on mortgage 25%

    Find a way to claim the car if you do any work trips that was my biggest income tax offset.

    • Agreed with this. I think the % is based on floor space of your at home office to the whole house. You can than claim % electricity and potentially water (please check that). If you own the home, these deductions will reduce the cost base of the home and could mean you pay higher capital gains tax when you sell.

    • +2

      only if you run your own business

      if your employer has an office in your local area, you can't claim this.

      and even if you do claim office, the CGT lost might ruin this gain

      • I work for myself and never claim my primary residence mortgage for this reason (CGT).

        I claim a portion of utilities and internet though.

    • You can't claim mortgage repayments, only the interest.
      https://www.ato.gov.au/Business/Income-and-deductions-for-bu…

      • mortgage repayment excluding the interest is naturally not tax deductible, as you haven't lost money.

  • -2

    This great myth that people can employ tax strategies to pay no tax… is a myth.

    As an example there was a big article talking about corporates paying $0 tax. Number 1 was Qantas - with some stat how they had $2bn in revenue and didn't pay a cent of tax. The article clearly left out they had $3bn in expenses so they actually made a loss. You don't pay taxes on losses… Still - it is enough to enflame the massess who read the headline and have faux outrage. International off-shoring of income is another issue altogether and absolutely something that should be taxed higher.

    Individually, sure there are the Glenn Wheatley's who fraudulently move money off shore - equally their are tradies who do everything via cash.

    Those "rich people" who pay no tax are probably just using a corporate structure. Which means they tax is still paid at 30% - just not in their own name. And when that money eventually comes out - they pay the top up

    The only genuine tax free (and legal) way to pay zero tax is to be 60+ and have everything in superannuation.

    • +1

      Oh come on, some of the biggest companies in the world pay close to 0% tax. Google, Apple etc. They operate in Australia with impunity.

      The "losses" come when Apple Singapore sells stock into Australia at inflated values, which Apple Australia takes a loss on. Profits neatly transferred to a lower taxation area.

      If Qantas could offshore itself to do the same (there is a Qantas sale act prohibiting this), it would in a heartbeat.

      And if you think the tax is paid eventually when it comes out.. two words for you - family trusts.

      The tax system in Australia sickens me really.

      • +1

        So you simply didn't read my comment… offshoring of profits is a major issue,

        Perhaps you'd like to explain the family trusts a bit more… rather than just throw out jargon I suspect you don't understand

        Someone who has mega millions of dollars retained in company earnings… they are either going to need a family of 2500 or perhaps live to 563 to get those tax dollars out to spend at a tax rate less that 30%

        But "family trusts mate"… "negative gearing"… "jargon, jargon…"

        fuel the faux outrage

        • +2

          Family trusts

          I read it. You were acting like the normal situation is everyone paying their way - it's just untrue.

          Not is it just a major issue, it's a symptom of everyone screwing the system because they can and blaming someone else (often the poor) for why there's no money. If it's not offshoring it's negative gearing, super concessions, family trusts, fringe benefits tax & salary packaging etc. This can be done at the individual or corporate level

          There are ways for the individual, small/medium enterprises and big fish all to get away with paying bugger all - it's just a matter how much they want to push it. Only the lowest income earners get truly screwed over, cause they pay full tax (no deductions) & GST on almost everything they buy. That's why "broadening the base" by increasing the GST is so attractive.

          Who are the people you are saying are paying full tax reflective of their income again? Nobody with an accountant that's for sure.

        • Not sure you should be so confrontational, it is apparent you don't understand how current tax minimisation plans operate.
          A business incorporates in a low tax jurisdiction (Caymans, Bermuda etc. where there is zero company tax).
          That business opens a subsidiary in Australia, and grants it a licence to use it's brand and intellectual property.
          The Australian business then makes $10m in profits. Sadly, the off-shore owner raised their licensing costs by, you guessed it, $10m this year. So the Aussie business makes no profit to pay tax on, and the profit the Caymans business made via licensing attracts no tax.

          The owners of the off-shore company live in the house paid for by the company, make sure they are not resident in a high tax country, and enjoy the benefits of globalised tax minimisation.

          There are other strategies that rely on washing profits via some countries which have reciprocal no-double-taxation arrangements but treat, for example, capital gains or dividends differently. Check out https://en.wikipedia.org/wiki/Double_Irish_arrangement

          As for local residents, a family trust is a very easy and common way to minimise tax, although you are right it has its limits and won't do much for mega millions. But it will do a lot for mega thousands. If you have income producing assets, for example, a fruit shop, you place the ownership of that shop in a family trust. When you work there you claim only low wages. But each year, all the money made in profit is paid to the trust. The trust can then deliver that to whichever beneficiaries it wants. Typically, this will be young adults at uni, non-working spouses, retired parents etc. - anybody who has some room left in their tax free threshold of $18k. These beneficiaries then gift the money back to Mum & Dad, or back into the trust itself if that is where the growth is desired. Voila, the profits from a business are distributed around the family to pay as little tax as possible.

          A PAYG worker doesn't have these avenues open, but that doesn't stop those that do making use of them.

        • -1

          @mskeggs:

          Perhaps you should not begin by assuming people are idiots (nothing you said was new to me).

          A family trust structure is right at the end of a chain of tax evasion. They are also used for inter-generational transfer of wealth without taxation. Even the mega millionaires will use them for that last little bit of cream (as with all the other perks).

          Then those same people bitch about people getting $8K per year welfare to keep them off the street.

          Generally though, people with mega millions do what they what (as we saw with the mining tax) - govt and the ATO are scared of them. They can just move overseas anyway as they are "citizens of the world".

          It's the small to medium people that need to be threatened with audit and/or jail to make them pull their heads in - as the primary motivation behind these strategies is tax evasion (it really is).

          PS: Your last line is simply ridiculous. These structures cost money.

  • +4

    Strategies I use:

    1) Pre-paid interest. Invested in a managed fund and borrowed the money on June 30th. Prepaid the interest one year in advance before the end of the tax year. Immediate tax deduction. Subsequent years the dividends roughly equal the pre-payment. That was 10 years ago and I now have an asset worth more than I paid and have achieved tax relief.
    2) Salary packaging. Work in healthcare with generous health promotion charity tax relief. Another 30k/year deduction including meals and entertainment (soon to be reduced)
    3) Negative gearing. Buy a blue chip property with low yield and high growth potential. Live in it briefly then rent it out.
    4) Own a small business part time - many opportunities for tax relief from a business to offset income as an employee
    5) Salary sacrifice into super up to the maximum cap

    My above average income ends up as below average taxable income through these legitimate and legal methods. Most of these are available to anyone who can save their cashflow.

    • +1

      Are you able to elaborate on some of the business tax deductions you are able to claim by doing this? OR some of the personal expenses that can be claimed under the business umbrella. I have recently started a small business, currently just meeting costs with the revenue I get after paying payroll tax, public liability and workers comp, so business tax isn't an issue but would be great to move some of my personal tax under business.

      • Well owning a business doesn't allow you to just dump your personal expenses in your business account.

        But it can be helpful in a small way.

        For example, I am someone who likes to have some of the latest technology. I spend quite a bit on computers etc. As I now own a technology business much of this is now connected with my business income. If you run a home office, you may be able to claim some of your electricity, body corp, and water bills. You may also be able to claim some of your car expenses. Business expenses are only a minor strategy for me, I find the other strategies much more helpful.

  • I have previously done my own tax return, never considered an accountant. But this coming tax year I'll have a higher income than usual, combining a salary, sole trader income, and income from an investment property - am I getting to the point where it's worth engaging a tax accountant?

    • Are you married and have kids?

      I would definitely consider an accountant depending on the cost which can range hugely. I would try to find a small reputable firm that specializes solely on taxation services. Stay away from any mid tier accounting firm, as you will be charged ridiculous amount and your work given to a graduate who will try to finish it asap. Also don't waste your time with companies like H&R Block who are hopeless.

      • Not married, no kids. But this sounds like good advice.

  • +7
    1. Create a religion.
    2. Obtain followers.
    3. Obtain tax free status
    4. Enjoy religious privilege.
    • I want to roll around in a bulletproof pope mobile. above steps are now my life goal.

    • Weeds?

    • basically scientology.

  • The best thing I ever did was fill out a Tax Withholding Variation form from the ATO (you need a Windows PC to access it.)
    I'm pretty much guaranteed a certain amount of losses each year due to my investment property, so rather than get a lump sum at the end of each fiscal year, I get taxed less in my fortnightly pay. This gives me more money to invest/lose on the ASX.
    Most people use this to pay off the principal on their non-deductible debt. E.g PPOR

    • Do you have to meet any criteria to submit this application?

      • Nope, you just notified within two weeks if you've been approved or not. One year I was rejected, so I reapplied and got approved.

  • Any accountants here? Please share your stategies to help your clients to reduce tax. Thanks.

  • Work related protective equipment is deductible - I work in real estate and I am out of the office a lot so I claim sunglasses and suncream. This assumes you buy sunglasses every year which I generally do….

    Others
    - car miles
    - home office
    - Internet
    - phone plan
    - work related travel e.g. Taxi home from networking events
    - suitcase
    - laptop
    - iPad
    - iPhone
    - home office equipment e.g laptop stand + keyboard/ mouse etc
    - camera

    Some items are depreciated and others are rates per hour or km etc.

    I use a basic accountant who only charges $100…. Which is also deductible meaning it it even less than that. If anything my accountant is conservative however, she knows all the rules and who the ATO are targeting and accounting best practices etc….the main benefit to me is that it saves me considerable time and hassle and makes me get it done ASAP (rather than procrastinating for months avoiding a teadious task). For these reasons alone an accountant is totally worthwhile in my opinion…. I can then stay focussed on earning more money while someone else does all the boring paperwork, research and CPD training for their profession (accounting)

  • -1

    Trusts. Forget about your garden variety accountants. Seek a lawyer.

  • +1

    What about using a novated lease to either purchase a new vehicle (assuming you want a new car) or just lease your current vehicle?

    I'm only just learning about this but essentially you can use this to reduce your taxable income thus pay less tax.

    Anyone here doing this?

    • Need to be careful with this, as the car leasing companies generally charge a very high interest rate and fees, which kills off the benefits.

      It can work well for cheap cars (20-25k) that are expensive to run (>5k/year). Also better if you're in the 39% or high tax brackets.

      • I wish we can do our your own novated lease company like SMSF.

        • There's something similar called an 'associate lease'. Not all employers allow it, but if they do, you can structure it like your own SMSF.

  • How does the Tax Office know when to Audit you?

    • +5

      Eni mini mieni mo

    • +1

      It's based on data matching and how much tax they think you should be paying.

      If you get too aggressive with your deductions or start to under report income, you'll get flagged for an audit. I'm guessing they also make a trade-off between how much time it'll take them to audit you vs what they might actually recover. This is why they send lots of letters asking people to "re-examine" their returns, instead of just auditing people.

    • One method is if one year your tax deductions are not consistent, so if one year you had $500 of deductions and the next, $15,000 worth, there's a good chance you will be flagged in the system.

      Another method is people working in your industry, base it off an average, and if you're significantly over that average (everyone is different), it's possible the system will flag you. Whether you're audited or not, is up to them.

  • +1

    This guy told me he allegedly claims a part of foxtel as tax deduction. But hes a sports instructor so I guess it works for him

    • i certainly hope he pays a business subscription then

    • I work in the music industry (as an importer and performer) and back when I had foxtel I could claim a small percentage of it for the music channels. TBH it was 10-12 years ago now so I can't recall the percentage but it was worked out on the number of channels, my subscription costs etc. The % was small in the end 8 - 10% maybe. So not a great deal but it still helped!

  • I bought a bunch of arborist stuff to trim/take down trees on an investment property. I wonder if it will be tax deductible? Everything was over 300 bucks so it will have to be depreciated.

    Lucky though I have done a few jobs pruning and even a removal so the gear has somewhat paid for itself.

    • don't see why not, but if you use for your poor, might have to pro rata it

  • +1

    If possible, move to Asia, you will pay less tax there (light humor).

    • Unless it's a professional role, the income is much less as well.

  • The main way I reduce my tax is by giving to a charities.

    This can be beneficial if it brings you into a lower bracket etc.

    Doesn't help me in that way, but it does reduce the tax I'm paying (as well as available funds)

  • I'm curious. If someone wants to minimize tax on profits (capital gains) from shares. Is it true that if I put them in a Trust (family trust)- I won't have to pay tax on it? What are the negatives of doing this- can I access the money when I want?

    • Trust pays no tax because it retains no profit. Trusts have to distribute their profit (capital gain for example) to their beneficiaries, which would then pay the tax at appropriate rate.

      • Could you say that in other words? So I would pay tax on the trust as a beneficiary?

        • Yes you will pay tax on the distribution to you from the trust as ordinary income, but you would be likely to spread the gain across a number of beneficiaries to take advantage of lower marginal rates.
          Although I'm not sure how the CGT discount for assets held over 12 months applies in this circumstance.

  • -1

    Offset account if you have a personal mortgage.

  • A few years ago I did my own taxes in eTax but didn't submit it. I'm fairly certain I put in everything I could legally do.
    Then I went to a tax accountant with all my receipts and such and answered all his questions honestly.
    The figure I got from him was significantly higher than what I managed so now I just visit him.

    Can I get in trouble for what my tax accountant does?

    • yes, your accountant isn't repsonsible

    • Your accountant should have given you the details of yoru return to sign off on. If I were you, I would have compared that to what you did, to see where the differences are, and if they're honestly things that apply to you but didn't know to claim.

      But, as unclesnake says, you're ultimately responsible, not your accountant.

    • yes you are responsible for your tax return and if you are audited you are liable for (obviously) the additional tax, and any penalties / interest applied.

      the only exception is to claim "safe harbour" and that only applies to protect you from paying any penalties if you can prove you gave your registered agent all the relevant information and documents and the agent him/herself failed to take reasonable care. If the ATO decides the agent acted "recklessly" or with "intentional disregard of the law" you are liable for the penalty still. This doesn't get applied often.

      • Does me having pretty good records myself count as "proof"?
        Not sure how else to prove you gave al relevant information and documents.

  • My strategies so far in running a home-based business:

    • Claim computer equipment / accessories / peripherals
    • Claim a portion of rent
    • Claim a portion of phone
    • Claim any education expenses
    • Claim any business travel by car (client to client)
    • Claim online expenses, eg essential subscriptions, email, domains etc.

    If there are any accountants around, I'm curious whether I can claim on any of the following:

    • Business lunches (ie having lunch or coffee with a client to discuss a project. Never anything over the top)
    • Parking fees / carpark charges when visiting a client
    • As part of using a car to travel between clients - do I get to deduct any servicing costs for the car? Or does that fall under the car's depreciation? (although the car wasn't purchased as a business asset, so maybe not?)

    Any other ideas welcome!

    • +1

      Business lunches, no. That's an entertainment expense.

      Parking fees when visiting a client, yes but keep records.

      Servicing fees for cars depends on what method your using. If cents per km, then no. If log book or 1/3rd of expenses methods, then yes you can claim the relevant portion

      • Thanks, very helpful!

        With the car - which method is generally better? I've been using the logbook method so far (done by my accountant), but my car servicing fees have skyrocketed a bit this year, so would it be better to swap to the other method?

        Also with parking - what about parking somewhere for business purposes, but not to visit a client? eg going shopping for office equipment in a Westfield etc.

        Thanks again.

        • +1

          If you've been using log book method you should've been able to claim a portion of servicing costs (your log book percentage)

          For 2016 FY onwards there's only 2 methods. Cents per km (max 5000 km at 66 cents pkm = max deduction of 3300)and log book method. Choose whichever method will give you the best deduction and you can change year to year.

          As for parking at westfield. .lol. look technically if you can prove it was for work, then yes you can claim it. But be realistic. If you claim westfield parking for every fortnight it's a little bit of a joke. Don't go claiming your weekend shopping trips. Oh and if you really wanna be correct, then technically you should only claim the portion of your parking ticket that you spent on work shopping. So a 5 hr parking ticket to buy office stationery wouldn't fly. Lol

        • @CheapskateQueen: Oops - actually I meant I've been doing the cents/km method, not logbook. I'll check with my accountant which one will be best this year. :)

          As for parking at Westfield, no no I wasn't planning on actually claiming regular shopping trips! More like when I spent 6hrs at IKEA getting a bunch of office furniture (and nothing else!), and got stung with a huge parking fee.. ugh.

          Thanks again for your insights!

    • Curious about claiming rent as I also work from home 100%.

      This page seems to indicate you can't claim rent - https://www.ato.gov.au/General/Property/Your-home/Working-fr… - does anyone have any links showing contrary?

      • I found this: https://www.ato.gov.au/General/property/property-used-in-run…

        Saying that if you run your business from home 100% (ie home = principal place of business), you can claim a portion of occupancy expenses including rent, mortgage, rates etc.

        I keep hearing about the CGT implications of this, but I believe it's only relevant to owning your home (rather than renting as I'm currently doing).

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