As 30 June is fast approaching, below are a few ideas to reduce your tax (or increase your net worth).
Do it now (or at least before 30 June)
1. Make a Super co-contribution of $250
If you earn under $63k, consider making a super co-contribution in 2012. The government has announced the maximum $1,000 will reduce to $500 after 1 July 2012, so if you can beg, borrow or stash a few hundred (or even the full $1,000) before 30 June.
Cost = $20 to $1,000 (depending on what cash you have) – say $250.
Benefit = up to 100% return on capital (however as it might take 40 years for you to access it, this reduces the incentive a bit).
Note –even if you earn $50,000 – it is still worth contributing a few hundred dollars as you will get a proportional benefit. So you might
choose to put $250 in so the government will give you $250.
I’ve written a few articles on how to do the super co-contribution last year, super-co-contribution and
super-co-contribution2 so check these out. You might have also received an email from your super fund in the last few weeks explaining how to do this.
2. Buy something that is immediately tax deductible
As there aren’t many deductions available to employees anyway (particularly office workers), there might not be much you can think of.
Note that buying an asset (like a computer, ipad, etc) you are using fully or partly for work, isn’t immediately deductible (and depreciation is calculated on days) – so probably not worth buying just before year end.
Stationary for work
Work memberships/subscription fees
Small items (like USB sticks, a mouse for your work computer, etc).
3. Make donations
Making donations to a DGR (deductible gift recipient) is a great way to lower your tax bill or increase your refund.
A $100 deduction doesn’t mean you will get $100 extra tax refund, but you pay less tax on your marginal tax rate.
So you might save 30% marginal tax back + 1.5% medicare levy + 4% low income offset = 35.5%. (or $35.50 tax saving on $100 donation).
Or on the 15% tax rate you might save your 15% marginal tax rate + 1.5% medicare levy + 4% low income offset = 20.5% (or $20.50 on $100 donation).
There are heaps of charities – Salvation Army, Vinnies, World Vision, Cancer Council, Save the Children, RSPCA being a few of the ones I have supported in the past.
Do you have a favourite charity?? – please list it in the comments below.