There are several ways to reduce your outgoings and make better investments. This article shares strategies that could help you pay less tax and make wiser insurance investment decisions.
How to pay less tax and make wiser insurance investments:
1. Check the deductions you can claim
To start, you need to check how much you can claim as a tax deduction. Certain investments or expenses are tax-deductible to varying degrees. From your last year’s tax return, you will be able to see how much in total you can claim as a tax deduction for various things such as mortgage interest and maintenance of private vehicles, for example.
2. Trade down and outsource
If you can’t claim all of your deductions, you should be able to trade them down. You might consider renting a room in your home or hiring a Ute and vehicle instead of buying the same item outright.
3. Only spend what you earn
Save up for the things that could see you pay less tax and make wiser insurance investments, like superannuation. Don’t go over your budgeted income every month if you don’t have enough money to set aside for super.
4. Buy term insurance over premiums paid annually.
The most common method of paying less tax is insurance policies with longer terms than those available today. Suppose you can afford to pay upfront for a longer term. In that case, you will not only avoid paying premiums over the life of your policy, but it will also allow you to pay less tax annually as the government uses an average of 10 years to measure your taxable income.
5. Contribute to a retirement fund.
Up to 9.5 percent of your salary goes into superannuation, depending on your income. If you are self-employed and earning more than $300,000 per year, 12 percent of your income will go into superannuation. If you have children, one way to pay less tax is to contribute to their superannuation. They will be able to claim a deduction for their contributions, and if you earn more than $300,000 per year, you can also claim a tax deduction.
6. Switch insurers
There are a number of ways to get the insurance that will see you pay less tax and make wiser investments. Consider, for example, the fact that a couple could pay $2,400 per year for life cover from an insurer today. If they took out the same policy at age 20 and kept it until they were 70, they could pay as little as $1,200 per year.
7. Buy foreign currency via companies that do not charge GST. The value of our dollar is heavily influenced by the Australian dollar’s movement against other currencies like the US dollar, euro, and Japanese yen. For a while now, one way to pay less tax and make wiser investments is to buy foreign currency via companies that do not charge GST. The main advantage of this method is saving on your income tax and making wiser insurance investment decisions.
8. Switch to part-time work. To pay less tax and make wiser insurance investments, some professionals work part-time because it allows them more flexibility with their personal lives as well as gives them more money for their families and afford the odd round of golf here and there. If you can work part-time and make the necessary adjustments, you should be able to pay less tax and make wiser insurance investment decisions.
9. Get a tax agent. If you haven’t got one already, it might be worth searching for a tax agent as they can help you with almost everything around paying less tax and making wiser insurance investment decisions. They can also offer advice on which superannuation fund is best for your situation or how to make non-tax-deductible investments in the private sector that could see you save money in the long run.
10. Consider a transition to retirement pension.
If you want to retire early, you might be able to do so if you are over 55 years of age and have access to your superannuation. Two options see retirees pay less tax and make wiser investments, like transitioning to a retirement pension. You can take some of your money as a lump sum and leave the rest in superannuation for when you’re at retirement age. Or, you can draw some of your money out as income in the form of an annuity so that it’s going into your pension super fund and is therefore not being taxed until you draw it out as an income stream.
11. Switch to term life insurance A term life insurance policy generally has a higher face value than other life insurance policies. Still, it is paid out over a shorter period. For example, instead of paying $1 per week for death cover, you can pay $50 every six months. Because your premiums are spread over such a short period, you pay less tax and make wiser investments because the premium is spread out over a longer time. Term life insurance generally comes with quite affordable premiums, depending on how much coverage you want, so it could be a great way to pay less tax and make wiser investments.
12. Get a range of insurance policies.
Having different types of insurance on a motor vehicle, home, and contents insurance policy is important to get the most out of your premium. If you only have one type of insurance or one type of policy for all three, you will miss out on getting the maximum benefit that could be gained from it.
13. Buy life insurance over premiums paid annually.
The second most common way to pay less tax is by purchasing life cover: the premium payments over the life of your policy are not taxed; therefore, there’s no tax payable on the premiums you paid today. Suppose you do end up buying life insurance over a premium paid annually. In that case, you should make an effort to ensure that your policy has the right level of cover, with the right amount of premiums paid annually, and has a constant sum assured.
There are several ways to reduce your outgoings and make better investments. This article shares strategies that could help you pay less tax and make wiser insurance investment decisions.
How to pay less tax and make wiser insurance investments:
1. Check the deductions you can claim
To start, you need to check how much you can claim as a tax deduction. Certain investments or expenses are tax-deductible to varying degrees. From your last year’s tax return, you will be able to see how much in total you can claim as a tax deduction for various things such as mortgage interest and maintenance of private vehicles, for example.
2. Trade down and outsource
If you can’t claim all of your deductions, you should be able to trade them down. You might consider renting a room in your home or hiring a Ute and vehicle instead of buying the same item outright.
3. Only spend what you earn
Save up for the things that could see you pay less tax and make wiser insurance investments, like superannuation. Don’t go over your budgeted income every month if you don’t have enough money to set aside for super.
4. Buy term insurance over premiums paid annually.
The most common method of paying less tax is insurance policies with longer terms than those available today. Suppose you can afford to pay upfront for a longer term. In that case, you will not only avoid paying premiums over the life of your policy, but it will also allow you to pay less tax annually as the government uses an average of 10 years to measure your taxable income.
5. Contribute to a retirement fund.
Up to 9.5 percent of your salary goes into superannuation, depending on your income. If you are self-employed and earning more than $300,000 per year, 12 percent of your income will go into superannuation. If you have children, one way to pay less tax is to contribute to their superannuation. They will be able to claim a deduction for their contributions, and if you earn more than $300,000 per year, you can also claim a tax deduction.
6. Switch insurers
There are a number of ways to get the insurance that will see you pay less tax and make wiser investments. Consider, for example, the fact that a couple could pay $2,400 per year for life cover from an insurer today. If they took out the same policy at age 20 and kept it until they were 70, they could pay as little as $1,200 per year.
7. Buy foreign currency via companies that do not charge GST. The value of our dollar is heavily influenced by the Australian dollar’s movement against other currencies like the US dollar, euro, and Japanese yen. For a while now, one way to pay less tax and make wiser investments is to buy foreign currency via companies that do not charge GST. The main advantage of this method is saving on your income tax and making wiser insurance investment decisions.
8. Switch to part-time work. To pay less tax and make wiser insurance investments, some professionals work part-time because it allows them more flexibility with their personal lives as well as gives them more money for their families and afford the odd round of golf here and there. If you can work part-time and make the necessary adjustments, you should be able to pay less tax and make wiser insurance investment decisions.
9. Get a tax agent. If you haven’t got one already, it might be worth searching for a tax agent as they can help you with almost everything around paying less tax and making wiser insurance investment decisions. They can also offer advice on which superannuation fund is best for your situation or how to make non-tax-deductible investments in the private sector that could see you save money in the long run.
10. Consider a transition to retirement pension.
If you want to retire early, you might be able to do so if you are over 55 years of age and have access to your superannuation. Two options see retirees pay less tax and make wiser investments, like transitioning to a retirement pension. You can take some of your money as a lump sum and leave the rest in superannuation for when you’re at retirement age. Or, you can draw some of your money out as income in the form of an annuity so that it’s going into your pension super fund and is therefore not being taxed until you draw it out as an income stream.
11. Switch to term life insurance A term life insurance policy generally has a higher face value than other life insurance policies. Still, it is paid out over a shorter period. For example, instead of paying $1 per week for death cover, you can pay $50 every six months. Because your premiums are spread over such a short period, you pay less tax and make wiser investments because the premium is spread out over a longer time. Term life insurance generally comes with quite affordable premiums, depending on how much coverage you want, so it could be a great way to pay less tax and make wiser investments.
12. Get a range of insurance policies.
Having different types of insurance on a motor vehicle, home, and contents insurance policy is important to get the most out of your premium. If you only have one type of insurance or one type of policy for all three, you will miss out on getting the maximum benefit that could be gained from it.
13. Buy life insurance over premiums paid annually.
The second most common way to pay less tax is by purchasing life cover: the premium payments over the life of your policy are not taxed; therefore, there’s no tax payable on the premiums you paid today. Suppose you do end up buying life insurance over a premium paid annually. In that case, you should make an effort to ensure that your policy has the right level of cover, with the right amount of premiums paid annually, and has a constant sum assured.
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