How much are you really paying in taxes?

March 16, 2015 Sam Saggers

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How much tax are you really paying?

How much tax are you really paying?

You might not think much about it, but we pay a LOT of taxes – more than just what our employer takes out of each pay packet.

Here’s a list of some taxes that many of us pay:

  • Personal income taxes – percentage of income
  • Partnership or trust profits – taxed on share
  • Capital gains tax – percentage of asset value
  • Corporate taxes – 30% (minus franking credits)
  • Goods and services – 10%
  • Property taxes – based on property value
  • Departure tax – set fee
  • Excise taxes – based on consumer price index
  • Fuel taxes – added to cost of petrol
  • Luxury car tax – percentage
  • Customs duties – fee on imported goods (percentage)
  • Payroll taxes – percentage payable by employer
  • Fringe benefits tax – included when lodging personal income tax
  • “Inheritance tax” – inherited assets may incur CGT
  • Superannuation taxes – may or may not incur a tax
  • Stamp duty – based on purchase price
  • Various state and local taxes

Ouch… that’s a lot of taxes! Many of them hidden because they’re part of the final price consumers pay.

How Much Are You Paying?

Personal income tax accounts for a sizeable portion of the taxes we pay.

For example, the following were calculated using the most recent tax schedules effective through 1 July 2014:

tax liability graph

Now granted, some tax offsets and deductions can help reduce your tax liability, however wouldn’t you love slashing your tax bill even more?

How We Can Reduce our Tax

Some of these taxes we won’t be responsible for unless we meet the requirements (e.g. luxury car tax) however many of them do impact us, both directly and indirectly, such as taxes on goods and services.

While we can’t avoid paying for some taxes, we most certainly can reduce some of them such as the personal income tax.

How?

A good method is through property investing.

Take a look at the following example:

Compare the Pair - Tax

The figures used for this example are not recent, however the principle remains the same; owning investment property can significantly reduce your tax bill.

Some examples of deductions available to property investors:

  • Depreciation
  • Financing costs
  • Property purchasing costs
  • Maintenance and repair costs
  • Body corporate fees
  • Agent fees
  • Insurance costs
  • Council and water rates
  • Travel expenses

As you can see it’s not hard to significantly reduce your taxable income (thereby reducing your tax owed) by purchasing investment properties.

Of course you’re not simply reducing your tax, you’re creating wealth for your future.

Sound like a good idea?

Come along to our next FREE Property Investor Night to learn more.

This month’s topic?

Slashing your tax liability through property investment!

Seats fill up fast, so book yours now!

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