How to minimise tax as an 18 yo full time student, earning around 30-35k a year.

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  CyberMurning on 08/08/2018 - 11:27

  ok, i know the number are different but similar thread is exist?
  1 hour 19 min ago [Avatar] Kavaguru How can I minimise my tax?

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  nephilim on 08/08/2018 - 11:29

  You will be getting most of back anyway?

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  [Deactivated] on 08/08/2018 - 11:37

  +7

  You don't pay much tax already.

  • 

    rompastompa on 08/08/2018 - 11:39

    Not if they earned 30-35k this financial year ;)

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  spiff on 08/08/2018 - 11:46

  +2

  The only possible salary sacrifice you could have is super which I wouldn't bother doing at your age. Other salary sacrifice arrangements depend on your industry and employer but I assume you're a casual employee so salary sacrifice packages wouldn't be available.

  Then there's your deductions. Being a FT student there wouldn't be too many deductions. If you have a uniform for your work then you could consider claiming laundry expenses. If you have to drive from one job to another then you can claim for those km's that you travel between jobs. You can't claim any university fees or textbooks or anything like that.

  Your effective tax rate at 35k is around 10% so it's not too bad, but kudos on thinking about these things so early in your life.

  • 

    Tbrando17 on 08/08/2018 - 11:53

    Thanks so much for the detailed response.

    Regarding deductions, is uniform e.g shoes deductible? And also how would I record/claim the distance travelling between jobs?

    Thanks again!

    • 

      spiff on 08/08/2018 - 12:05

      +2

      In your case I don't think shoes are deductible. It's only laundry expenses for job specific uniform i.e. if your shirt has the company logo on it. Refer here

      Easiest way to claim km's is to keep a log book of your travel.
      1) Date of travel
      2) Start point (job 1) and end point (job 2)
      3) Start odometer and end odometer readings to get distance travelled
      4) Multiply by 68c per km for the distance travelled only between jobs (can't claim for travel from home to job or uni to job, ONLY job to job).
      5) The figure calculated in 4) is deductible in your tax return under work related travel expense

      Disclaimer: not tax advice, and any information provided can be found on ATO website. This is the website for cents per km method.

      • 

        Tbrando17 on 08/08/2018 - 12:09

        Wow another huge detail reply. Thanks so much spiff. I’ll look into this for sure!

      • 

        reno on 02/09/2018 - 16:24

        @Tbrando17:

        yep just logbook it all. easiest way
        up to 5000km within the FY. anything over you'll still be capped, but there are alternative options to claim (and you'd pick whichever is more beneficial)

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    HighAndDry on 08/08/2018 - 11:54

    +2

    The only possible salary sacrifice you could have is super which I wouldn't bother doing at your age.

    To the contrary, by the magic of compound interest, a dollar you put into super now is worth exponentially more than a dollar put into super even just a few years down the line.

    OP - any money you can spare, put into super by way of salary sacrifice (up to the limit). Future-you will thank you for it.

    • 

      spiff on 08/08/2018 - 11:59

      +1

      1. There's nothing magical about compounding interest.
      2. Jokes aside, it depends on the superannuation fee structure that OP is with. When I was that age earning supermarket wage my super balance was so low that it was eaten up by flat fees and the investment return was poor because of the low balance.
      3. Why deny access to money for ~50 years (who knows what the retirement age will be when OP retires?).
      4. The government can change rules not only around retirement age but access to super. I'd rather invest the money into bluechip shares, ETF's, or save up for a property deposit than lock away my money for literally decades.
      • 

        Tbrando17 on 08/08/2018 - 12:07

        I do see both of your points. Thanks for the explanation behind both replies.

        I would be open to salary sacrificing - how does this work? I don’t know much about it at all.

        And re blue chips, ETFs etc I am tracking a few at the moment and am quite familiar with this area.

        I guess the main focus I have is to just reduce the tax I pay as much as possible- so which ever way I can do this I will (understanding my options are limited). And I know that it’s really nothing in tax compared to what you guys pay, but as a student (or maybe just to me), a few hundred/ thousand is a huge sum for me.

        Thanks again guys!

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        resisting the urge on 08/08/2018 - 12:13

        Certainly used to be the case- I was dumped in an AMP fund when I was a student and they took all my money.

        Wasn't that before employees got a choice of fund and people were able to buy value by industry funds and cheaper funds than their employers dropped them into for kick-backs.

        Surely this is really no longer the case if people choose a good low-fee fund?

      • 

        Tbrando17 on 08/08/2018 - 12:15

        For me, I’m in rest. Woolworths assigned me to it defaultly, but after some research and reading around it seems to be a good enough fund with low fees, so staying for now.

        When I got the office job, they let me select which fund I wanted to go with but offered ANZ as a default.

      • 

        spiff on 08/08/2018 - 12:32

        @Tbrando17: Salary sacrificing is an arrangement between you and your employer to deduct a portion of your pre-tax salary to whatever you have agreed to. e.g. super contributions, novated lease for a car, laptop.

        With super, I could be wrong here but I thought that those voluntary contributions were taxed at 15%. So if your PAYG effective tax rate is 10%, then you're worse off contributing to super because that's taxed at a higher rate. Super contributions through salary sacrifice are only "in the money" once you earn more than $47.5k.

        Investing was a side note. To answer your question on reducing tax the best option imo is by scrutinising your deductions. Also imo an accountant wont be worth it at this stage of your life.

      • 

        HighAndDry on 08/08/2018 - 15:10

        1. (I need this for the numbering to match up…)
        2. Yes, but if OP is earning $35k, they're going to have a decent bit of super (far more than I did at that age). Concerns about flat fees/etc are valid though, and OP should definitely see how much they are and if he should move to a lower fee super fund.
        3. Because OP can save tax now, and will have more money in the future. Not to mention you can, through various means, use that money before retirement (by way of property investments, etc) - it's not 100% locked up.
        4. But OP can't save taxes if they puts the money into shares.

        Again, it's just an option, and as hopefully OP understands is general not specialized advice. Just saying I wouldn't rule out salary sacrificing to super just because of OP's age.

      • 

        HighAndDry on 08/08/2018 - 15:19

        @spiff:

        So if your PAYG effective tax rate is 10%

        That's not how that works though - you would have to use the marginal tax rate, which for income over around $18,000 is 19%. Any amount salary sacrificed to super is taxed at 15% and is deducted from OP's income for PAYG purposes (so yes, OP only really on saves 4% in tax, but hey savings are savings).

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        Love a bargain on 10/08/2018 - 00:12

        @Tbrando17:

        You should seriously consider consolidating your super accounts.

        This won't change your tax bill but will reduce the amount of fees you pay out of your super accounts.

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  pantsparty on 08/08/2018 - 12:14

  You are only going to be paying a few $k in tax. Unless you have lots of deductions to claim there probably isn't too much you can legally do to reduce your tax amount.

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  toniyellow on 08/08/2018 - 12:22

  +2

  As others have said, consider putting a little bit extra in super

  As you are low income earner if you make a personal contribution (i.e. not your employer mandated one) you get a co-contribution from the government https://www.ato.gov.au/Individuals/Super/In-detail/Growing/S…

  Personal contributions can also be taken out again under the FHSSS rules
  https://www.ato.gov.au/Individuals/Super/Super-housing-measu… (You don't need to use it to buy a house, but if you don't you pay a withdrawal tax - not too bad as you saved on tax by putting it in there so it puts you back in a similar position as if you kept your money outside super)

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    spiff on 08/08/2018 - 12:33

    Good points