When it comes to a list of expenditures that a typical Australian has to account for in any given year, it's not surprising that taxation frequently appears at the top. Of course, for many people this is deducted "at source" so they never effectively see it, but for small business owners, it's absolutely an expense they need to regulate and control as much as possible. While many people may seem resigned to losing a chunk of their revenues in this way, others understand that with careful planning they can mitigate the effect on their financial lives. This type of planning can begin with some relatively easy steps, so if you are fretting about taxation matters at the moment, where can you start?

Charitable Giving

You might begin by instituting a "feel-good" step and making regular contributions to a favourite charity. This may have been on your to-do list for some time, but you might not have been aware that every donation you make to a registered charity is something you can deduct on your tax bill. Just remember to keep records of everything that you donate so that you can provide proof if requested.

Splitting Deductions

Make sure you make the most out of your deductions. While a purchase that is solely intended for work may be simple to analyse in this way, take the time to apportion the value of any item that you buy which is used partly in your personal environment and partly at work. Some people find this confusing and don't go through the effort to do so. However, you will find that if you do and your deduction is 100% valid, it can make a considerable difference.

Keeping Receipts

While talking about deductions, remember that you should keep a receipt for every transaction so that it becomes easier to calculate your expenditure and so that you can provide proof if requested by the ATO. It may be better to get into the habit of keeping a receipt for every single purchase you make, whether business or personal, and in that way you won't occasionally forget to pick up an all-important business receipt. You can get hold of electronic apps these days that allow you to photograph the receipt directly into an account, so you won't have to worry about a mountain of irregularly sized pieces of paper. 

Insurance Levy

More specifically, you might like to focus on your health insurance. You may not have any private coverage, and if your income exceeds a certain level, then you have to pay a 1% Medicare surcharge to the government. Do some quick calculations, and you may well find that private health coverage will cost you far less than that 1% penalty, so consider implementing it.

Getting Further Advice

There are many other ways to maximise your revenues and control the amount of tax that you need to pay to the ATO. Contact tax agents for more information.

Share