Not sure what happens in other countries, but today is the last day of the financial year in Australia. The end of the financial year is the completion of the yearly accounting period, so it is time for taxpayers to grab their shoebox of receipts (metaphorically speaking) and head off to the accountant to complete their tax returns.
Though tax evasion is a crime, tax minimalisation is not. So, there are several ways a taxpayer can minimise their tax.
- Maximise your tax deductions, those allowable expenses that reduce your taxable income (and therefore your tax liability).
- Maximise your tax offsets, also called tax rebates. These are tax credits that you can use to reduce the amount of tax you pay.
- If your partner has a lower marginal tax rate, buy investment assets in their name. In this way, the net income from the investment will be taxed at a lower tax rate.
- Salary sacrificing into superannuation involves forgoing some pre-tax salary and putting it into your superannuation instead. This is a tax-effective strategy because super contributions are taxed at the concessional rate of 15% in Australia.
- Negatively gear your investments. When the tax-deductible expenses associated with an investment property exceed the rental income it generates, this reduces your taxable income and the amount of tax you pay.
It's too late to implement these strategies at the end of the financial year. You need to plan ahead and ensure you get your tax affairs in order throughout the whole financial year so that you can have a 'Happy EOFY' (End of Financial Year).