Ouch - $30K being taxed and not much deductions to off set

Discussion in 'Accounting and Tax' started by bumblegoodie, 2nd Jun, 2015.

  1. bumblegoodie

    bumblegoodie Call me BG

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    Hello,

    My accountant recently completed my tax for the last financial year and still i have a massive $30K withheld tax that i cannot deduct or offset from my four investment properties' interests and expenses.

    Very upsetting to see my $30K goes straight to the tax man.

    Could any tax experts and tax professionals tell me what i can do this year to legally claim as much as i can to prevent another $30K of tax?

    Could you please provide recommendations as to what other investments and other things i can do to reduce my tax?

    I understand shares, opening a business, studying expenses, etc?

    thank you.
     
  2. GreyGhost

    GreyGhost Member

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    Do you have a PPR loan? - consider salary packaging??
     
  3. Ace in the Hole

    Ace in the Hole Don't compete, Dominate !

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    Can you pre pay interest on some of your IP's?
     
  4. Nick Valsamis

    Nick Valsamis Vantedge

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    It sounds like you want to reduce the tax to 0.

    But wouldn't that mean you need to have losses on par with income meaning you would be in a worse position than having to pay 30k tax?
     
  5. Paul@PFI

    Paul@PFI Tax, SMSF & Planning

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    Your expectations appear incorrect. You cant have a taxable income of zero and enjoy a good lifestyle. If there is a $30K tax SHORTFALL when the return is prepared you should discuss those strategies with your accountant. Put into perspective, if your income is $1m paying $30K in tax is brilliant.

    Tax strategies are regressive as the lower your income gets the lower the tax rate and the size of "benefit" that applies. A good example is a tax deduction for someone earning $25K a year. The deduction may result in a marginal tax rate benefit at 19%. So for every $1 you spend you get 19cents as a refund. A high income earner may get back 49cents in the dollar. Spending money therefore always is regressive.

    A taxpayer earning $1m has good access to credit etc. A taxpayer on $15K would struggle to get a credit card approved.

    It must be very upsetting paying income tax on the income you earn. One way to make yourself feel better may be to consider making a large charitable donation to those less fortunate who have bigger problems. The homeless, poor, ill, handicapped, disabled etc.
     
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  6. TMNT

    TMNT Member

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    my recommendation, start a business, earn the same amount of profit from it, and then you will ahve far more options to severely reduce your tax bill!


    however, I get the feeling you want to have your cake and eat it while being a PAYG employee
     
  7. D.T.

    D.T. Property Lookerafterer

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    Send it to me, i'll give you a receipt with my ABN on it.
     
  8. pinkboy

    pinkboy SS Lookerafterer

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    I meet clients for a coffee for an hour or so to go over this sort of scenario. I usually charge $39,990, but for you Ill do $29,990.


    To round up to the $30k, You can shout me the coffee and claim that as a further deductable expense.


    pinkboy
     
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  9. DaveM

    DaveM KFC Buyers Agent

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    You could always bypass the middle man and EFT $30k to Seaview's daughter
     
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  10. Scott No Mates

    Scott No Mates ...and people wonder why?

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    is this withholding tax because you are not providing a TFN or just a gripe because you're earning over???
     
  11. S.T

    S.T Member

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    I think you need to get to the root cause of your issue here. You would not be paying all that tax if you didn't earn any income. So to fix it, stop earning money?
     
  12. bumblegoodie

    bumblegoodie Call me BG

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    Gents,

    I work two jobs and the total income from the two jobs are approx. $150k.

    I am not looking to reduce my tax to zero but to
    Find ways to reduce tax since the investment
    Properties that I have did not help much with
    Reducing the tax amount.

    Could you please provide some suggestion? As
    What types of deductions you have had in the past?

    Also, since iam at the high tax bracket. When I
    Buy a laptop too for $3000 will I be able to claim 100%
    Of it as deduction ?

    Thanks
     
  13. Blacky

    Blacky Member

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    BG

    Even if you can claim the laptop (or other expense) as a deduction you are still spending dollars to save cents.

    Take your example
    Your earned $150,000
    You spend $3,000 on a claimable expense
    You now have an income of $147,000

    Your tax amount is currently $30,000 (or 20% tax rate).
    Your new income is $147,000 or a tax amount of $29,400 (20%)
    You have just spend $3,000 to save $600 in tax.

    20% tax rate on $150,000 isn't too bad at all.

    Blacky
     
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  14. westminster

    westminster P Plate Developer

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    Does your second job get taxed at 50% so therefore you will get a hefty refund?

    The main source of legitimate deductions are interest and depreciation for your IPs if they are in your name. If they are in a Trust then only some will help with 'negative gearing'.
     
  15. skater

    skater Capitalist

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    So you're investing to save tax? :eek:
     
  16. lazibones

    lazibones Member

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    Can you put some money into superannuation, it wont save a lot though as it will still be taxed at 15%. I don't know if the rules have changed for Investing in shares using a Deferred Purchase Plan, where you could pay 3 years interest in advance and claim a deduction. Investing in BRK this way has been lucrative in the past 5 years, considering it costs $1,400.00 in interest if you borrow the money to pay 28k the interest in advance , to get 100k exposure to BRK., and you could save 9k in tax.
     
  17. jim1964

    jim1964 Part Time Sheep Farmer

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    Post of the day.
     
  18. Terry_w

    Terry_w Member

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    Tax paid depends on the amount of your taxable income.

    So the obvious way to reduce tax is to reduce your taxable income. This can be done by 2 ways:

    1. Earn less money or
    2. Claim more deductions

    Earning less money could be done via:
    1. Reducing hours worked
    2. Reducing hourly rate
    3. Making a loss on an investment or business

    Claiming more deductions involves:
    1. Making sure you are claiming everything you possibly can, and/or
    2. Spending more money on things you can claim.

    Thats it in a nutshell.
     
  19. bumblegoodie

    bumblegoodie Call me BG

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    thanks Terry.

    that is what iam trying to get at. what is the things i can claim?
    help anyone?
     
  20. pinkboy

    pinkboy SS Lookerafterer

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    What did you buy that directly helped you earn income?

    pinkboy