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4 Ways Australians Can Reduce Their Taxable Income


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September 21, 2022

When it comes to taxation, you can't avoid paying taxes. However, there are some ways you can minimize the tax you are paying through tax deductions. If you are on the lookout for a way to minimize your taxable income, there is more to think about than tax cuts and concessions. As a taxpayer, your investment plan should include smart tax plans. To get more out of your investment strategy, below are four strategies to reduce your tax.

Use Salary Sacrificing

For Australians, sacrificing your salary opens a way for the employed to keep down the tax that you have to pay. The taxpayer puts some of their pre-tax income toward a benefit before taxation. Some common benefits of salary sacrificing are superannuation and motor vehicles.

An employee forgos part of their pre-tax paycheck before they receive it. For instance, they can use salary sacrificing for the following:

Purchase a new car

Pay rent

Pay for insurance

Mortgage payments

The above are some of the benefits of salary sacrificing. The benefits are also called "fringe benefits" which save Australians thousands of dollars in taxes yearly. There is a cap on what is salary sacrificed, or salary packaged. However, the fringe benefits tax (FBT) may have an impact on certain items that your employer is willing to offer you.

Keep Accurate Tax and Financial Records

Currently, the Australian Tax Office (ATO) will ask more questions regarding your tax deductions than they used to years back. If you're asked about tax deductions, you need to produce the receipts for the same. Unfortunately, you can have lots of headaches due to taxes if you don't have a sound filing system.

If you don't have a sound record-keeping system, you'll be among the many Australians who miss out on deductions they can claim legally. Record-keeping is not complicated. You can spend ten minutes every week downloading statements and updating your logbooks. Ensure that you keep all the receipts in an organised and easily accessible file folder or a filing cabinet. You can use the services of Pherrus Financial to handle all your needs regarding tax.

Managing Your Debts

Small debts can be a big problem if they are not efficiently managed. You need to consolidate all your debts into a single payment so that you can track them. If you have debts on mortgages, credit cards, or investment properties, interest expenses are used in the reduction of the income tax you'll pay.

Claim Your Deductions

Ensure that you declare all deductions so that you can pay less taxes in Australia. What may seem to be small and insignificant to you will amount to huge savings every year. For instance, if you buy an item that you use at work and you sometimes also use it during time off, you may still claim the amount you spent on it. This money is known as work-related tax deduction.


Sound financial planning and strategizing reduce tax liabilities. For people looking into debt consolidation, you can learn how to reduce taxable income by following the steps above. You will be able to have more money in your pocket and pay your debts faster.


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About the author

Samantha Waites

I try to cover as many topics as I can and offer my readers the chance to find out useful and interesting things as often as possible. I consider writing to be my strongest skill and I am very fortunate to be able to work with a team of talented and passionate writers at my side every day.

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