TAX TIME COUNTDOWN - How to pay yourself a bonus
Money Magazine Australia|May 2023
With the high cost of living, a juicy tax refund will be a welcome boost. So now is the perfect time to use our step-by-step guide to maximise your deductions and take advantage of other strategies to reduce your taxable income - legally, of course.
NICOLA FIELD
TAX TIME COUNTDOWN - How to pay yourself a bonus

THE AUSTRALIAN TAX OFFICE (ATO) handed out refunds totalling more than $38 billion to 10.8 million Australians in 2022. It was a bumper year that saw the average refund top $3000 – extra cash that many of us will be sweating on this year. While the end of several pandemic tax breaks could slim down your 2023 refund, there’s still time to get the max back on tax.

HOW YOUR REFUND IS CALCULATED

Let’s strip away the mystery of tax refunds. The tax you pay each year is based on your “taxable” income. That’s assessable income (such as wages, salary, government payments and investment returns) less allowable deductions. Not all income is assessable. A lottery win, for instance, is usually treated as a windfall gain.

On the flipside, you may be able to claim deductions relating to your job or investment portfolio that help to lower your taxable income.

Once your taxable income is sorted, the ATO calculates your tax, deducts any offsets and tacks on the 2% Medicare levy to reach your final tax bill. If it’s less than the tax your employer deducted through the year, you’re due a refund.

The bottom line is that maximising your tax refund is all about (legitimately) minimising assessable income and making the most of allowable deductions.

WHAT IS MY MARGINAL RATE?

The marginal rate is the highest tax rate you pay. Australia has a progressive income tax system, meaning higher rates apply as your income rises (see table, right).

Denne historien er fra May 2023-utgaven av Money Magazine Australia.

Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.

Denne historien er fra May 2023-utgaven av Money Magazine Australia.

Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.

FLERE HISTORIER FRA MONEY MAGAZINE AUSTRALIASe alt
An outrageous, beautiful monopoly
Money Magazine Australia

An outrageous, beautiful monopoly

Telstra's mobile business is a cash machine with few competitors, giving it the highest returns in the world.

time-read
4 mins  |
July 2024
Drop the anchor to judge value
Money Magazine Australia

Drop the anchor to judge value

Buying and selling decisions should be based on where a stock price is going, not where it has been.

time-read
3 mins  |
July 2024
Powering the AI boom
Money Magazine Australia

Powering the AI boom

Beyond the software and chipmakers, where will the energy come from?

time-read
3 mins  |
July 2024
Get into life
Money Magazine Australia

Get into life

Tucked inside super are products that can protect you from life's inevitable uncertainties.

time-read
5 mins  |
July 2024
Paths to home ownership
Money Magazine Australia

Paths to home ownership

Taking the road less travelled can sometimes deliver unexpected benefits.

time-read
5 mins  |
July 2024
Sold! Quick ways to add value
Money Magazine Australia

Sold! Quick ways to add value

Small, strategic changes can have a big impact on the look and feel of your home. And get you a better price on auction day.

time-read
5 mins  |
July 2024
Money lessons the kids need to know
Money Magazine Australia

Money lessons the kids need to know

Your children can learn a lot from your past money mishaps. Here are eight financial conversations I have had with mine.

time-read
4 mins  |
July 2024
Property-investing rules: are they likely to change?
Money Magazine Australia

Property-investing rules: are they likely to change?

The pressure for the government to curb the tax benefits of tax concessions, such as negative gearing and the capital gains tax discount, is unrelenting. Most recently, independent senators David Pocock and Jacqui Lambie proposed five options for paring back investment property tax concessions, with savings to the Federal budget of up to $60 billion over the next decade.

time-read
3 mins  |
July 2024
What's love got to do with it?
Money Magazine Australia

What's love got to do with it?

A rollercoaster of emotions could be driving poor crypto behaviour.

time-read
3 mins  |
July 2024
Are we ready to be cash-free?
Money Magazine Australia

Are we ready to be cash-free?

Saying goodbye to our piggy banks too soon could leave small businesses in the dark when problems arise.

time-read
2 mins  |
July 2024