Yahoo Lifestyle How I’m playing the stage 3 tax cuts to make extra money – immediately
Nicole Pedersen-McKinnon said you can legally game the ATO to leave yourself better off.
Highly anticipated stage 3 tax cuts finally arrive on July 1, but they are less controversial than they once were. That’s because, while they were planned to benefit mainly the rich, we’re now (virtually) all going to share in them.
But there is a way to get extra tax back from the ATO. However, you have fewer than eight weeks to set it up.
Here’s the crucial three-step game plan I am using to win more tax relief than the government intended.
Do you have other ATO tax return hacks? Email yahoo.finance.au@yahooinc.com
Step 1: Delay any income you can
This financial year, which ends on June 30, you will pay a higher rate of tax than the one commencing July 1. This is because the lowest tax rate, which you pay on income up to $18,201, will fall from 19 per cent to 16 percent.
The main marginal rate is also being cut from 32.5 per cent to 30 per cent and will apply to higher incomes ($135,000 instead of $120,000).
The income thresholds for the rates above this will also be raised. So you want to push as much income as you can OUT of this higher tax year and INTO the next lower tax one.
Bottom line, you’ll get to keep more of it.
RELATED
Cost of living tax cuts: The date millions of Aussies will see an 'increase in take home pay'
Unusual tax claims ATO approves that Aussies may not have considered
If you are a contractor or freelancer who invoices, you might be able to make this work by delaying invoicing. As an employee, perhaps there’s a way of getting any overtime later.
Are you in line for a bonus? You want it in 2024-‘25, not this tax year.
Of course, affordability might be the issue, in a cost-of-living crunch. Just bear in mind that more money to your name, ultimately, might make it worth being super lean for less than two months.
Step 2: Bring forward all your deductions
Most years, most taxpayers miss most deductions. That means they miss big opportunities to slash their tax.
On the flip side of the step above, you can also cash in by bringing all possible deductions FORWARD to reduce this bigger-tax-year’s bill.
There are weird and wonderful ones you may not even be aware of.
For example, carry your laptop and work papers around? You might be able to claim a new handbag or satchel in this year’s tax return.
Work outside? Sun-safe equipment — including sunglasses — is important. (Pay attention teachers and sports trainers.)
Wear specific or protective clothing? Gather those receipts for purchase or laundering costs. Boots and safety glasses can get particularly expensive.
And don’t forget to sign up for whatever subscriptions or memberships that are helpful in your trade or profession. All tax deductible.
What about working from home? You can now claim a flat rate of $0.67 for each hour worked… so long as you have a record of those hours. You don’t need a dedicated home office either.
If relevant, pre-paying next year’s interest on investment loans will also redistribute the deduction to the year you will benefit more.
And get donating. Provided you do this to a registered charity, any donation over $2 comes straight off your assessable income.
All of this will ensure you pay far less this higher-taxed year. You might even get a refund. And, while technically a deduction, this next one deserves a category all of its own.
Step 3: Pre-pay your income protection premiums
Now, if you don’t have income protection, you should. No matter how stretched you think things are financially now, what if an accident or illness left you unable to earn?
Forget your house – your income is your most valuable asset. And the good news is that premiums that protect it are usually tax deductible.
An insurer will usually let you pre-pay up to a year of your premiums (or even more). Talk to them about the cost of paying upfront for 2024-25; you may find it even costs less to do this, as often an insurer will apply a loading to payments they instead collect ‘pay-as-you-go’.
With three simple strategic steps, you could get a far higher refund this year… so take double advantage of the tax cut coming your way next year.
If you game the stage three tax cuts, they get even better.
Get the latest Yahoo Finance news - follow us on Facebook, LinkedIn and Instagram.
