Paying taxes is something everyone must do. While it's certainly not the most enjoyable part of your financial journey, by utilising financial strategy, you can reduce your tax burden and maximise the amount of money you're allowed to hold onto.
Your first step should be determining what marginal tax bracket you fall under. This will tell you how much tax you pay for each dollar earned.
For instance, the Australian Taxation Office will charge you $54,547 plus 45 cents for each dollar over $180,000 if you have a taxable income of $180,001 and over, according to the Australian Securities and Investments Commission.
Once you know how you're being taxed, you can start formulating ways to reduce your tax burden. Fortunately, some of the easiest ways to reduce how much you're taxed can also benefit your superannuation and retirement strategies.
The federal government encourages Australians to save for retirement by offering a number of tax incentives.
However, it's important to remember that there are certain guidelines you must follow in order to receive these benefits, such as staying within the contribution cap.
MOVO's free Future Wealth Forecast tool can help you see how much money you may have down the line based partly on your after tax salary and superannuation balance. Together with our experienced financial planners, this can help you figure out what kind of tax strategies you should use as part of your financial planning.