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How to reduce the tax you pay

There are various potential ways you can reduce the tax you pay. You may be entitled to tax deductions, offsets or you may choose to opt for salary packaging.

Tax deductions will reduce your taxable income amount. For example, potential tax deductions are work-related expenses, self-education expenses, charitable donations, the cost of managing your taxes. These deductions will reduce the amount of income on which tax is calculated.

Tax offsets apply after tax has been calculated, alternatively known as rebates. These will reduce the amount of tax payable. For example, some offsets you could claim are low/middle-income earners, taxpayers with an invalid relative, pensioners and senior Australians, the taxable portion of a superannuation income stream.

Salary packaging allows you to ‘package’ your income into salary and benefits. There are many potential ways you can package your salary. For example, you could arrange to earn less salary in exchange for higher superannuation payments. By reducing your salary this way, you are reducing your taxable income.

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Basics of SMSF investing

January 21, 2021

Setting up an SMSF fund is the simplest step. Establishing a fund which delivers you consistent returns from your investments is much more difficult.

Investing successfully involves determining precise goals and picking investments which will effectively achieve those goals. The advantage of SMSFs is that you can build a portfolio which reflects your short-term and long-term goals in response to changing market conditions.

In an SMSF fund, your investment options are:

Before you begin investing, consider what might be the best way to diversify your portfolio. How you portion your investments will depend on your funds, the market, and your goals. Regardless of what your plan is, diversification should be a priority.

Choosing an SMSF as opposed to an industry or retail super fund provides you with more flexibility, but also with more responsibility. Researching before investing is key if you want the best out of your SMSF.