How to Save Australia Income Tax

Every individual working in Australia falling within the Australia Income tax brackets wants to save Income Tax.


In order to reduce the tax burden of the tax payers, the Australia Income Tax Law provides a wide range of tax deductions and exemptions to individuals who are permanent residents of Australia and individual who hold an Australia PR visa or Australia Temporary resident visa or even an Australia work permit.


Some of the exemptions which are allowable as tax deduction in the Australia Income Tax law resulting in savings of Income Tax in Australia are stated below:


1. Work related Travelling Expenses:

Individuals who are permanent residents of Australia can claim deductions in total income in respect of the travelling expenses between their residence and office and also for travel between two workplaces subject to some constraints.


Every individual who claims deductions in respect of work related expenses in Australia Income Tax should adhere with the following:-

  • To claim a work related deduction, an individual must have spent the money himself.

  • The expenditure by the individual tax payer should not have been reimbursed by the employer.

  • The individual should possess a keep a record of the document to prove his expenditure.

In case, the expenditure is for both work and personal purposes, deduction under the head Work related expenditure can be claimed only for the part of the expenditure which has incurred for official work purposes.


2. Self-education expenses:

Expenses incurred by an individual for his own educational expenses in order to improve his skills and gain a higher qualification is allowable as tax deduction in the Australia Income Tax law. Such expenditure would include tuition fees, cost of meals and accommodation, stationary expenses, expenses on purchase of study material, etc.


To view the tax computation considering self-education expenses click Here


3. Other work related Expenses:Expenses incurred by permanent residents of Australia and individuals holding a Australia Temporary Resident visa or an Australia work permit for the payment of union fees and subscriptions, overtime meals, professional seminars, etc. relating to their work can also be claimed as deduction as per the Australia Income Tax Law.


4. Low value pool deductions:Individuals who are permanent resident of Australia or hold an Australia PR visa can claim deductions for the decline in the value of low cost assets costing less than 1000 AUD and low value assets whose depreciable value has been written off to less than 1000 AUD.


Claims for deduction for decline in value of assets are known as pool deductions.


To view the tax computations after low value pool deductions click Here


5. Interest deductions:Individuals holding an Australia PR visa or permanents residents of Australia can claim tax deductions for expenses incurred in earning interest income on investments. E.g. Amount paid for advice on investments, Account keeping fees where accounts are managed for investments.


6. Dividend Deductions:Individuals holding an Australia PR visa or permanents residents of Australia can claim tax deductions for expenses incurred in earning dividend income on investments. E.g. interest charged on money borrowed to purchase shares or similar investments.


7. Gifts and donations:Individuals holding an Australia PR visa or having permanent residential status in Australia can claim tax deductions for gifts given to organizations who are entitled to receive tax deductible gifts called deductible gift recipients (DGR’s) as per the Australia Income Tax Law. For gifts or donations of money the amount must be more than two Australian dollars.


The Australian Taxpayers can claim deductions for payments made as gifts and donations by him to any organization or individual.


As per the provisions stated in the Australia Income tax law, any individual who wants to claim deduction for a gift has to meet the following conditions:-

  • The gift must be made to a Deductible gift recipient (DGR), the list of which is specified by the Australia Taxation office.

  • The gift must be in a true nature where the donor should not receive any material benefit or advantage.

  • The gift must be of financial nature, the cost of which can be valued.

Deductions under the head of gifts and donations cannot be claimed in case of the following items

  • Raffle or art union tickets

  • Items such as chocolate and pens

  • The cost of attending fundraising dinner, even if the cost exceeds the value of the dinner

  • Membership fees paid for club, associations or any social gatherings.

  • Donations made to school building funds.

  • Payments where an individual receives a material benefit or advantage for making the donation.

8. Cost of managing tax affairs:Expenses which an Australia PR visa holder or a Australia Temporary visa holder or a permanent resident of Australia incurs for preparing and filling Australia Income Tax return is allowed as deduction. E.g. fees paid to a tax return preparer, buying a tax reference material, etc.


To view the tax computations after deducting the expenses relating to managing tax affairs click Here


9. Superannuation contributions:An individual who is a permanent resident of Australia or holds a Australian PR visa or Australian Temporary resident visa or work permit can claim deductions for contributions made towards superannuation fund or a retirement savings account (RFA) specified by the Australian government . The total contribution which is exempt from Australia Income Tax is 25000 AUD.


To view the tax computations after making deductions in respect of superannuation contributions click Here


10. Income protection insurance:Cost incurred for purchase of an insurance policy for the loss of his income can be claimed as tax deduction as per Australia Income Tax law by permanent residents of Australia or any individual who holds an Australia PR visa or Australia Temporary resident visa or Australia work permit.


11. Charitable deductions:Charitable contributions made by permanent residents of Australia or individuals holding an Australia PR visa or An Australia Temporary resident Visa can be claimed as tax deductions provided the value of such donations is more than two Australian dollar.


12. Tools and other Equipment’s:Expenses incurred in purchasing tools, equipment or other assets to increase income by individuals holding an Australia PR visa, Australia Temporary Resident Visa or even resident individuals of Australia can claim tax deductions on such purchase. E.g. purchase of a calculator, computer, technical instruments, etc.


To view the tax computations after making deductions for acquiring tools and other equipments click Here

To know whether you are liable to pay Australia Income Tax click Here

To know about the current Australia Income Tax slabs click Here

To know about the Projected Australia Income Tax slabs in the future years click Here

To know more about the offsets and rebates in Australia Income Tax click Here

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