For many Australians, finding legal and effective methods to lower taxable income at the end of the financial year can offer substantial financial advantages. Whether you are a professional, business owner, or investor, understanding the available options can significantly impact your tax liability. Here are some strategies to consider.
How to Save Tax in Australia?
If you are trying to find out how to reduce taxable income, you can follow the following tax-saving strategies:
Salary sacrificing
With salary sacrificing, a taxpayer can put a portion of their pre-tax income toward a benefit before being taxed. Motor vehicles and superannuation are the most common salary sacrifice benefits. Thus, an employee would forgo a part of their pre-tax compensation before getting it. Salary sacrifice can be used to pay for a new computer, car, insurance, mortgage payments, rent payments, or other benefits while saving more in taxes each year.
Organise accurate financial and tax records
Over the past few years, the ATO has started keeping an eye on areas of income and deductions, and record-keeping. That’s why it is crucial to maintain records of income, investments, and expenses when it comes to claiming tax deductions. Your tax agent can help you maintain tax records, while the Melbourne bookkeeper helps you organise your financial records. By staying organised and tracking deductible expenses, you can increase your tax deductions and minimise your taxable income.
Claim eligible deductions
Ensure you are claiming tax deductions that you qualify for. If you spend money related to earning an income, education, investment properties, or medical expenses, you might be eligible to claim it. Don’t forget to keep documentation and receipts to back up your claim and consult with small business tax accountants who can help you address any deductions you may don’t know about to get the most out of your tax return.
Tax on 200k in Australia
You can calculate the tax you need to pay according to your earnings using a calculator by the ATO. On 200k in Australia and if you are a resident for the full year, the estimated tax on your taxable income is $60,667. However, it is recommended to check the calculation twice as it is estimated taxable income as per new conditions.
Is 150k a Good Salary in Australia?
According to statistics, 6.7 per cent of Australians consider $100,000 to $150,000 sufficient to be considered wealthy, whereas only 2.6 per cent would be happy with $80,000 to $100,000. However, if you are unaware of tax matters, you can receive support from a tax agent in Melbourne.
100k After Tax in Australia
If you earn $100,000 annually in Australia, you can expect $22,967 to be deducted as taxes. Consequently, your take-home pay will amount to $75,033 annually. Your marginal tax rate is 32.5%. This marginal tax rate applies to any additional income you make immediately.
Income Tax Rates and Threshold Changes
On January 25, 2024, the government introduced amendments to individual income tax rates and thresholds effective from July 1, 2024. These amendments have been legislated.
Starting July 1, 2024, the planned revisions to tax rates include:
- Lowering the tax rate from 19% to 16%
- Reducing the tax rate from 32.5% to 30%
- Raising the income threshold for the 37% tax rate from $120,000 to $135,000
- Increasing the income threshold for the 45% tax rate from $180,000 to $190,000
Consequently, due to these adjustments in tax rates, from July 1, 2024, the thresholds for the Senior Australian and Pensioner Tax Offset (SAPTO) will be:
| Status | Maximum tax offset amount | Shade out threshold | Cut-out threshold |
| Single | $2,230 | $34,919 | $52,759 |
| Each partner of a couple | $1,602 | $30,994 | $43,810 |
| Each partner of an illness separated couple | $2,040 | $33,732 | $50,052 |
Conclusion
Now that you know how to reduce taxable income in Australia. Using the above-mentioned tips, you can reduce your taxable income. If you don’t know how to do it, you can reach out to Reliable Melbourne Accountants.