As a sole trader or small business, if possible, it is best to put money aside throughout the year to help pay for your tax. Make sure you regularly set money aside, or are aware of future tax payments, so you are able to meet your tax responsibilities. A set routine for putting aside tax as you go is essential to avoid any tax-time panic.
You can make personal super contributions to your superannuation fund and claim it in your income tax return as an income tax deduction.
How does it work?
The best way to explain it is by an example. Steven is employed as an IT Consultant. During the 2017-2018 financial year, he earns a salary of $78,000.00. Steven makes a personal super contribution of $3,000.00 to his superannuation fund.
As tax time approaches, make sure you’re ready to claim all the deductions you’re entitled to. These include the following:
Travel. You can claim for expenses relating to travel you do for work, but not usually the trip to get to and from work.
Clothing, laundry and dry cleaning. You can claim on the cost of purchasing and cleaning uniforms and other work related clothing. It needs to be clothing specific to your work (such as safety clothing or a shirt with a logo on it) and not just general black pants or a white shirt that matches a work dress code.
If you’ve been watching the news lately, you might have heard that the change in franking credit rules is going to break open the earth and swallow our retirees whole.
Or if you’re listening to the other side of politics, it won’t. So who’s right? Who’s wrong? What’s a franking credit? Let’s start with that. A franking credit is used by the Government to avoid you paying tax twice on dividends from shares. Say you invest in a company like Google. Hang on, this article is about paying tax :). Say you invest in a company like John’s Global Meat Pies. John’s Global Meat Pies pays you $700 in dividends after paying $300 in tax on that amount ($1000 in total).