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Tax Management

Tax management is crucial. It’s important to keep on top of changes to tax rules so you know whether you are paying too much, too little or your fair share of tax.

Year to year, the rules change as new legislation is introduced. Often, changes to tax rules can be complex.

If your tax issues are especially complicated, you may need to consult a qualified accountant or tax agent to assist with you tax management.

Do a budget

In order to work out how much you’re spending weekly, monthly or yearly, do a budget. You can find one at www.fido.gov.au. And when you do it makes sure it is, as founder of Switzer Financial Services Peter Switzer calls it, a “brutal” budget. Include everything and don’t miss anything.

GST your life

Once you have done that, Switzer suggests to GST your life. So if you spend, say $30,000 a year, take 10 per cent of that, $3000. You could put this away in a bank account and save to buy shares or property at some point in the future.

The best way to stay ahead of the game is to regularly check out the Australian Taxation Office’s website, www.ato.gov.au.

Salary sacrificing

One way to manage your tax is to boost the amount in your super fund through salary sacrifice. You can arrange with your employer for an extra amount on top of the compulsory nine per cent to be put straight into your super fund. The benefit of this is the amount is taxed at 15 per cent, and not your top marginal rate of tax. This can save some people over 30 per cent in tax. Remember though, you generally can’t access this money until you retire so be careful you’re not overdoing it.

But keep this in mind: there are contribution thresholds, or maximum amounts you can add each year. Currently, if you’re under 50, the threshold is $25,000, while 50 and over is $50,000. If you add more than the threshold, the excess amount will be taxed at a higher rate. This was introduced in the 2009 Budget, but it’s likely a lot of people don’t know about the changes. That’s why tax management is important. And remember, check the Australian Tax Office website for more information on contribution thresholds.

If you feel you can’t keep up with all the changes and tax rules that affect you, ensure you speak with your qualified accountant or tax agent. It’s a sure-fire way to make sure you are up to date with tax management.

For advice you can trust, book a complimentary first appointment with Switzer Financial Services today. 

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