They say tax is an inevitable part of life, but this doesn’t mean its all bad! Tax deductions are a sweet little way to top up your bank account. Here’s how:
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So… what actually are tax deductions?
Tax deductions are expenses that lower your pre-tax income.
There are three main types of tax deductions:
- Work expenses (think computer for a designer, or a hammer for a tradie)
- Charitable donations (as long as they have DGR status)
- Voluntary super contributions
What is the benefit of lower pre-tax income?
Less taxable income has two potential tax reduction benefits:
- You pay tax on less incomeÂ
- You might pay a lower marginal tax rate
Meaning you pay less tax!
How do I claim a tax deduction?
You claim a tax deduction as part of your tax return.
Claiming tax deductions during tax time might mean that you get a boost on that sweet tax time return!
And increasing your tax return means more money in the bank for you! Not bad at all.
"Tax deductions are expenses that lower your pre-tax income"
