Some of the steps involved in reducing your tax bill are quite simple. Others are more complex, and potentially ‘riskier’. Here are some tax-planning ideas, but it is important to understand the risks and benefits of any tax planning strategy, and you should only proceed after obtaining qualified advice.

1. Record keeping

Even if you use an accountant to prepare your tax return, you are responsible for the information you provide and for keeping your tax records.

• Keep receipts of all your tax-deductible expenditure. If you are audited by the tax office, you need to be able to prove the expenses were incurred.

• Keep track of all your medical expenses. If net medical expenses exceed a threshold for the year, you are eligible for a tax offset.

• If you own investments you need to keep detailed records of income and capital gains. Required details include when they were bought, how much you paid, when they were sold and how much you received, and other details relating to the investment. These may include the costs of improvements to an investment property, or the amount of tax-deferred income received.
  

2. Tax deductions

You may be able to claim a tax deduction for many of your expenses. These include:

• donations
• self-education expenses
• premiums on income protection insurance
• work-related expenses.

There are many other tax-deductible expenses, and different deductions apply to different industries.

3. Tax-effective investments

If you are able to save, you could look at buying investments that provide some form of tax advantage: Tax-effective investments.

4. Salary packaging

Salary packaging involves the receipt of certain non-cash benefits in place of taxable salary.

Fringe Benefits Tax (FBT) means that most non-cash benefits are taxed at the highest marginal tax rate. In most cases, receiving such benefit is actually a disadvantage for employees. However, some items receive favourable treatment under FBT rules, so it can still be an advantage to receive these benefits as part of a salary package.

Items that can be included in a beneficial salary packaging arrangement include mobile phones, laptop computers, and novated leases on motor vehicles.

Not everyone can obtain a real benefit from salary packaging, so seek qualified advice first.

5. Superannuation

Superannuation is one of the most tax-effective investment strategies available today.  The earlier you start putting money into your super fund, the more tax you could save: Accelerating your (super) savings.

An IFFP planner can help you explore some of these options and also provide advice on insurance, investments and superannuation. Book an appointment with an IFFP planner