Any expense incurred in producing assessable income.
Ouch - $30K being taxed and not much deductions to off set
- Thread starter bumblegoodie
- Start date
Any expense incurred in producing assessable income.
Have you had a meeting/Skype with your accountant to review your return? If you're anything like me then you'll be paying your accountant a lot of money, so ask them, is there anything else in my scenario that I could be claiming? They will know your circumstances better than anyone on here. If your tax bill is annoying you that much maybe it's time to reduce your working hours and start enjoying the fruits of all your hard work.
thanks ellejay.
Yes, have organised a meeting with our accountant this saturday and will talk to him about it.
yes maybe is time not to work my second job because majority of my pay goes to the tax man anyways.
Hey BG, congrats on reaching the point where your money is working for you to the extent that you can rest up. Seriously, you're where most people are aiming to be. Nothing to do with me but life's too short to work two jobs if you don't need to, enjoy your free time
Hey BG, congrats on reaching the point where your money is working for you to the extent that you can rest up. Seriously, you're where most people are aiming to be. Nothing to do with me but life's too short to work two jobs if you don't need to, enjoy your free time
iam still young (i think) and if you look at the latest property magazine, there are ppl on this forum less than 30 years old achieving way more than i have.....
those are the ppl i look up to and continue to work hard.....
iam no where near where they are and also to reach to my next challenge.
but thanks for the kind words.... iam sure you are doing very well too =)
i simply do not understand this mentality of spending extra on non essential stuff to reduce your tax
its ludicrous
spend $3k to reduce your tax by $1K
NET POSITION MINUS $2K
it must be a payg employee mentality
the above would only work if you are buying something that you were going to buy regardless
its ludicrous
spend $3k to reduce your tax by $1K
NET POSITION MINUS $2K
it must be a payg employee mentality
the above would only work if you are buying something that you were going to buy regardless
if you compared yourself to other people all the time you are never going to be happy
using these examples as motivation is a good thing though
TMNT, yes i know , there is always someone better and wealthier than you so where do you stop.....
iam happy with what i have but when comparing to others this pushes me to achieve higher and move on to the next challenge.... =)
You could use a tax agent and discuss your personal situation with them in detail and identify a range of strategies which may be available that suit your circumstances. The fee is tax deductible too.
thanks Paul.
one thing iam not 100% sure is for example if i approach a tax agent for 1 hour meeting and just say they charge $300.
How much percent % of claim of the $300 will get back?
My income is $150K so the tax bracket is 49cent per dollar. Will i get 49% back?
How do you figure that?
The tax rate is 37% from $80k up to $180k + Mediscare levy & HECS (but HECS isn't a tax, it is payment of a debt).
Even the highest tax rate is 47% + Mediscare, still less than 50%
yes i was just guessing the round about figure. =P
so going back to the example:
for the fee of $300 , will i get back 37% of $300 which is $111?
Trick answer...Nothing unless you have had excessive tax withheld and expect a refund. refunds don't happen due to deductions. A tax deduction reduces the tax payable. What generates a refund is overpaying instalments or other forms of withheld tax. A person on an income of $15K with no employer tax withheld can claim deductions of say $5K and they will still not get a refund.
If the tax advice could identify strategies that reduced taxable income by $8K then the value of the $300 tax advice could see a decrease in tax payable of $3,237. If the strategies identify no savings then the $300 fee would see tax reduced by $117.
The highest marginal tax rate of 49% (included Medicare) starts for $180,001 and up. I don't believe your taxable income is that high based on prior posts. Your marginal tax rate is 39% including medicare levy ?
hahhaa great answer =) love it.
yes, Scott corrected me before. Iam on $150K so it will be 39% tax bracket.
I asked this question because many assumes that the fee of $300 is 100% deductible which is not the case as it comes under your tax bracket.
thanks again Paul. looking forward to working with you for this year's tax refund =)
It is 100% deductible.
This means you can claim the whole fee. But doesn't mean you will save the whole fee in tax, but it save your marginal tax rate x the expense in tax.
Just like many expenses it IS 100% tax deductable, however what you get back depends on your circumstances.
In other words, if you earn $100k, and this $300 was the only thing you had that was a deduction, you would get taxed as if you earnt $99,700. That is what is meant by a deduction. It is deducted from your INCOME, not the tax you pay on that income.
The $300 is tax deductible. It is a tax deduction to reduce taxable income. Thereafter the taxpayer marginal tax rate determines the value of the deduction.
A tax deduction ONLY reduces taxable income. The amount likely to reflect as a actual reduction in tax payable will vary between 0% and 49% depending on marginal tax rate.
One of the important things often overlooked with some forms of expenditure is what the VALUE of the outgoing is.
- Pay $300 for tax advice..What is the value added by the advice ? More of less than $300 ?
A good example is all this talk of the business $20K write off. In reality its a lure for mug punters. Who would buy something for $20K just to save somewhere between $0 and $6K in tax ?? You will be at least $14k out of pocket. Its a bit like burning $100 notes to keep warm. Better value would be buying a heater.
You might be better off INVESTING the $20K into a income producing asset ie a new car for a sales rep than just spending it to save tax.
Examples of deductible items which may generate income benefits ?
- Super
- Income protection insurance
- IPs
- Margin lending on shares
- Enhancing skills, qualifications and training
As a salary and wage earner there are limited options for you to reduce your tax.
With your investment properties just follow the standard route of ensuring you are claiming depreciation and consider if prepaying interest is of benefit.
Accountants are not magicians that can make tax disappear. With various structure there may be options to distribute to others at lower tax rates or defer some of the tax.
At some point you may need to accept the tax amount you pay and realise it funds the roads you drive on, the schools you attended, health care etc.
We all hate paying tax but it is just part of earning money. Minimise where you can and focus on earning more.
With your investment properties just follow the standard route of ensuring you are claiming depreciation and consider if prepaying interest is of benefit.
Accountants are not magicians that can make tax disappear. With various structure there may be options to distribute to others at lower tax rates or defer some of the tax.
At some point you may need to accept the tax amount you pay and realise it funds the roads you drive on, the schools you attended, health care etc.
We all hate paying tax but it is just part of earning money. Minimise where you can and focus on earning more.
