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:
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.
A good method is through property investing.
Take a look at the following example:
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:
Property purchasing costs
Maintenance and repair costs
Body corporate fees
Council and water rates
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!