Adrian Raftery - 101 Ways to Save Money on Your Tax - Legally! 2022-2023

1 COVER

2 TITLE PAGE 2022-2023 Adrian Raftery

3 COPYRIGHT First published in 2022 by John Wiley & Sons Australia, Ltd 42 McDougall St, Milton Qld 4064 Office also in Melbourne First edition published by Wrightbooks (an imprint of John Wiley & Sons Australia, Ltd) in 2011. New edition published annually. © Adrian Raftery 2022 The moral rights of the author have been asserted ISBN: 978-1-119-88317-3 All rights reserved. Except as permitted under the Australian Copyright Act 1968 (for example, a fair dealing for the purposes of study, research, criticism or review), no part of this book may be reproduced, stored in a retrieval system, communicated or transmitted in any form or by any means without prior written permission. All inquiries should be made to the publisher at the address above. Cover design by Wiley Tables 1.1 , 1.2 , 1.5 , 1.6 , 2.1, 2.2, 2.3, 2.4, 2.5, 3.1, 3.2, 4.2, 5.1, 6.1, 6.2, 6.4, 7.1, 8.2, 8.3, 8.4 © Australia Taxation Office for the Commonwealth of Australia Tables 1.3 , 1.4 © Commonwealth of Australia Disclaimer The material in this publication is of the nature of general comment only, and does not represent professional advice. It is not intended to provide specific guidance for particular circumstances and it should not be relied on as the basis for any decision to take action or not take action on any matter which it covers. Readers should obtain professional advice where appropriate, before making any such decision. To the maximum extent permitted by law, the author and publisher disclaim all responsibility and liability to any person, arising directly or indirectly from any person taking or not taking action based on the information in this publication.

4 DEDICATION Dedicated to all the umpires, referees and other officials in community sport throughout the nation. Without you the game wouldn't be possible. May the ATO continue to consider your pastime a hobby for tax purposes.

5 ABOUT THE AUTHOR ABOUT THE AUTHOR Dr Adrian Raftery (PhD, MBA, B Bus, CTA, FCA, FIPA FFA, F Fin, GAICD), aka Mr Taxman, is one of Australia's leading commentators on all matters relating to tax and finance. With regular appearances on TV and in the media, Adrian is one of Australia's leading tax and financial experts. Part of Adrian's ‘tax’ appeal as a financial media commentator is due to his personable and approachable style. Just as importantly, Adrian's 31 years’ experience as an award-winning accountant working with small and medium businesses, and as a personal tax expert, means he has the relevant knowledge and experience to give qualified advice. Adrian is considered so good at what he does that he was one of the youngest Australian accountants to have advanced to Fellowship with the Institute of Chartered Accountants at the age of 33 and had an award-winning Sydney accountancy firm at just 25! Adrian is also one of the country's leading experts on the rapidly growing Australian superannuation industry with work from his PhD on self-managed superannuation funds published in top-ranked international academic journals. These factors and Adrian's ability to translate complicated tax, superannuation and finance jargon into understandable and workable solutions are probably why ‘Mr Taxman’ is frequently called upon for his viewpoints by the Australian media.

6 HOW TO USE THIS BOOK HOW TO USE THIS BOOK This book is designed to be of benefit to 99.9 per cent of taxpayers. If you have an investment property, own a share portfolio, have money in superannuation, have a family, work as an employee or run your own business, there will be something in here for you. While it is extremely unlikely that all 101 tips will be applicable to you, your family or your business, just feel comfortable knowing that one tip alone will be more than enough to pay for the investment you make in buying this book. This book has been written to take into account all phases of life, so if you find that only a few tips apply to you right now, don't worry because more tips will become relevant as you grow older. Make sure that you consult your own adviser to assess your own particular needs before implementing any of these tips. If there is one constant with tax, it is change. That is why I update this book every year to take into account the latest federal budget changes and other Government measures each year. If you intend to use this book as a reference guide over a number of years, you should always check the latest tax legislation for the current figures and thresholds. Remember that tax planning should be a year-round exercise, not merely one that's done in the last few weeks before 30 June. A lot of these strategies are just as useful on 1 July as they are on 30 June.

7 INTRODUCTION

8 PART I: YOU AND YOUR FAMILY 1 MARRIAGE 2 INCOME SPLITTING 3 DEPENDANT (INVALID AND CARER) TAX OFFSET 4 CHILDREN 5 PAYMENTS FOR NEW PARENTS 6 CHILD CARE 7 LOW-INCOME EARNERS 8 SENIOR AND PENSIONER TAX OFFSET 9 OTHER GOVERNMENT BENEFITS 10 FAMILY BREAKDOWN 11 DEATH 12 FAMILY TRUSTS

9 PART II: YOUR EMPLOYMENT 13 CAR USAGE 14 METHODS TO CLAIM CAR TRAVEL 15 TRAVEL 16 UNIFORM 17 HOME OFFICE 18 OTHER WORK-RELATED DEDUCTIONS 19 KEEPING THOSE RECEIPTS 20 ATO HIT LISTS 21 REDUNDANCY 22 WORKING A SECOND JOB 23 SALARY SACRIFICE 24 FRINGE BENEFITS 25 LIVING-AWAY-FROM-HOME ALLOWANCE

10 PART III: YOUR EDUCATION 26 CLAIMING SELF-EDUCATION EXPENSES 27 THE $250 THRESHOLD 28 STUDENT LOANS 29 AUSTUDY AND ABSTUDY 30 SCHOLARSHIPS 31 SCHOOL BUILDING FUNDS 32 EDUCATION SAVINGS PLANS

11 PART IV: YOUR INVESTMENT PROPERTY 33 NEGATIVE GEARING 34 INTEREST 35 DEPRECIATION AND LOW-VALUE POOLING 36 REPAIRS AND MAINTENANCE 37 BORROWING AND LEGAL EXPENSES 38 OTHER RENTAL PROPERTY DEDUCTIONS 39 FOREIGN INVESTMENT PROPERTIES 40 CAPITAL GAINS TAX 41 PAYG WITHHOLDING VARIATION 42 CO-OWNERSHIP OF YOUR INVESTMENT PROPERTY

12 PART V: YOUR SHARES 43 DIVIDENDS 44 SHARES OWNED BY LOW INCOME EARNERS 45 BORROWING TO BUY SHARES 46 OTHER SHARE DEDUCTIONS 47 CAPITAL GAINS TAX ON SHARES 48 REALISING CAPITAL LOSSES 49 INHERITING SHARE PORTFOLIOS 50 SHARE TRADERS VERSUS SHARE INVESTORS 51 RIGHTS AND OPTIONS 52 EMPLOYEE SHARE SCHEMES 53 SHARE PORTFOLIOS WITHIN SELF MANAGED SUPERANNUATION FUNDS 54 CRYPTOCURRENCY

13 PART VI: YOUR SUPERANNUATION 55 CONTRIBUTION LIMITS 56 TRANSFER BALANCE CAP 57 DOWNSIZER CONTRIBUTION 58 COMPULSORY EMPLOYER CONTRIBUTIONS 59 SALARY SACRIFICE 60 DIVISION 293 TAX 61 SUPER CO-CONTRIBUTION 62 TRANSFERRING FOREIGN SUPER 63 SELF MANAGED SUPERANNUATION FUNDS 64 BUYING PROPERTY WITHIN SMSFS 65 GEARING THROUGH A SUPER FUND 66 ACCESSING YOUR SUPER 67 TRANSITION TO RETIREMENT 68 ACCOUNT-BASED PENSIONS 69 DEATH BENEFITS 70 LOST OR UNCLAIMED SUPER

14 PART VII: YOUR BUSINESS 71 CHOOSING THE RIGHT BUSINESS STRUCTURE 72 TAX OBLIGATIONS 73 RECORD KEEPING 74 DEFERRING TAX 75 Trading stock 76 BAD DEBTS 77 HOME-BASED BUSINESSES 78 SHARING ECONOMY 79 EMPLOYING PEOPLE 80 SINGLE TOUCH PAYROLL 81 TAX CONCESSIONS AND OFFSETS 82 SELLING OR CLOSING DOWN 83 PERSONAL SERVICES INCOME 84 NON-COMMERCIAL LOSSES 85 DIVISION 7A LOANS BY PRIVATE COMPANIES 86 FRANCHISING 87 CROWDFUNDING 88 LOSS CARRY BACK TAX OFFSET

15 PART VIII: MISCELLANEOUS 89 OVERSEAS INCOME 90 GETTING A GREAT TAX ACCOUNTANT 91 LODGING YOUR TAX RETURN 92 AMENDING RETURNS AND OBJECTING TO ASSESSMENTS 93 ATO DATA MATCHING 94 PROBLEMS PAYING YOUR TAX 95 ESTATE PLANNING 96 PRIVATE ANCILLARY FUNDS 97 LEVIES 98 ZONE AND OVERSEAS FORCES TAX OFFSETS 99 TAX-EFFECTIVE INVESTMENTS 100 TAX PLANNING AS A 365-DAY PROCESS 101 JUST DO IT!

16 GLOSSARY

17 BIBLIOGRAPHY

18 INDEX

19 END USER LICENSE AGREEMENT

1 Chapter 1 TABLE 1.1: tax rates for individuals excluding levies (2022–23) TABLE 1.2: tax on eligible income for minors (2022-23) TABLE 1.3: child care subsidy rates (2021–22) TABLE 1.4: child care hourly rate caps (2021–22) TABLE 1.5: thresholds for senior and pensioner tax offsets (SAPTO) (2022–23)... TABLE 1.6: deceased estate tax rates (2022–23)