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Sole trader invoice example for Hospitality

in this video I'm going to show you 12 ways to  legally pay less tax to help you save thousands   of dollars every year and with tax time coming  soon these tips will help you maximize your   tax return for this year and plan better for  next year let's get straight into it taking   advantage of tax rates the first way to save tax  is to use Australia's progressive tax system to   your advantage in Australia the more you earn the  higher the tax rate you pay your taxable income   falls into different brackets and the percentage  increases along with your earnings if you invest   in shares the tax you pay on dividends and  capital gains depends on your tax bracket so   here's a tax strategy if you're married or have  a long-term partner consider investing under   the name of the partner with a lower income this  way the tax on your shares will be calculated at   a lower rate for example suppose you sold some  shares for a profit of $5,000 and your overall   income exceeds $120,000 which places you in  the fourth tax bracket you'd be charged 37%   plus a 2% Medicare levy on that $5,000 however  if your spouse works part-time and earn $35,000   per year they fall under the second tax bracket  if their shares were in their name they would   only pay 19% Plus 2% Medicare Levy which is a  significantly lower rate another way you can   take advantage is through the new FY 25 tax rate  the Australian government has announced changes   to individual income tax rates starting in fy2 in  the previous example we use the current FY 24 tax   rate starting from FY 25 so that's from July 2024  there will be a new tax rate the tax rate for the   second and third brackets will decrease and the  thresholds will increase the thresholds for the   fourth and fifth brackets will also increase  this change will benefit most Australians as   they will retain more of their income so you're  already saving on tax without doing anything you   can go on to the ATO website where they will show  you a number of deductions you can claim in your   tax return this year I'll now go through some of  the most popular ones beginning with work from   home deductions ing to the ABS website 37%  of Australians continued to work from home last   year and if you're one of them you may be able to  claim some deductions so to be eligible to claim   the deductions you need to be actually working  from home to fulfill your employment duties and   not just carrying out minimal tasks you also need  to incur some additional running expenses as a   result of working from home and you need to have  records to show you incur these expenses there   are two methods you can use to calculate your  deductions the first is the revised fixed rate   method which allows you to claim 67 cents on every  hour you spend working from home in The Current   financial year this includes the additional  running expenses you incur for the following   home and mobile internet or data expenses mobile  and home phone usage expenses electricity and gas   stationary and computer consumables please note  if you're using this method you can't claim a   separate deduction for these expenses elsewhere  or you would be double dipping I'll leave a link   to this page where you can scroll down and see  how to calculate the deductions in Greater detail   with some worked examples the second method is  the actual cost method where you work out your   deduction by calculating the actual additional  expenses you incur when working from home this   includes expenses you incur for all these things  on screen please go through them carefully and   see which ones apply to you if some of these items  are for both private and work purposes you need to   a portion your deduction on a fair and reasonable  basis you can only claim the work related portion   as a deduction I heard the ATO is cracking down on  work from home deductions this year so please make   sure you do your calculations correctly again I'll  leave a link to this page where you can see some   of the worked examples on how to calculate these  deductions motor vehicle deductions the next way   to save tax is to claim motor vehicle deductions  if you use your own car for work rated purposes   you may be able to claim expenses such as fuel  repairs and maintenance and overall depreciation   of your vehicle please note unfortunately  this does not include driving to and from   your workplace however you can claim for trips  made from your workplace to meet a client attend   work rated meetings deliver or collect items or  travel between two or more separate workplaces   there are two methods to calculate deductions for  car expenses the first method is a cents per kilm   method here you can claim 85 cents per kilometer  for all your car travel during the financial year   this method allows you to claim up to 5,000 work  rated kilm per car which covers the decline in   value registration Insurance maintenance repairs  and fuel costs to use this method you should keep   a record of your trips either in a diary or  through the my deductions tool on the ATO app   a worked example is provided here to help you  calculate your deduction for the financial Year   please not that the cents per kilometer rate may  change every year so please ensure you check the   current rate if you're watching this in the future  the second method is the log book method with this   method you must keep a log book recording your  work rated trips for a continuous period of at   least 12 weeks this log book is valid for up to  5 years you will also need to keep receips of all   your car expenses for the year once again this  page explains how to calculate your deduction   using a log book in more detail all links are  provided in the description so which one is better   well the first method is simpler but will it give  you a better refund who knows you can choose the   method that works better best for you or you can  calculate both and choose the one that provides   the better refund by the way if you don't own  a vehicle you can still make similar claims for   taxis ride shares and public transport expenses  incurred for work rated travel other work rated   deductions as you can see on screen you can  claim many other deductions if they're work   rated or help generate income let's check out  tools computers and other items used for work   the cost of tools and equipment such as hand and  power tools can be claimed so if you're a trade   who owns these tools for work this is basically  your bread and butter please make sure to claim   these other claimable items include calculators  cameras musical instruments safety equipment   computers bags stationery and office equipment for  a more detailed breakdown of these items you can   visit this page on the ATO website and select the  deductions that best apply to you however please   avoid overlapping and double dipping your  deductions for example you may have already   claimed computer and stationary expenses in your  work from home section claiming them twice may get   you in trouble with the ATO there are many more  deductions you can claim such as self-education   membership fees personal grooming gifts and ations  ditio even provides occupation industry specific   guides detailing what you can claim who knows  you might even discover some claimable items   you didn't even know about for example these are  all the things a cleaner can claim did you know if   you receive an overtime meal allowance from your  work you could claim the cost of the meal you buy   and eat when working overtime therefore you should  review these Pages thoroughly as they are packed   with valuable information you can claim up to  $300 of these items without a receipt however   if you exceed $300 you'll need to provide a  receipt or tax invoice for all the items if   you anticipate having a a lot of deductions for  the year consider downloading the ATO app and   using the my deductions tool to store your records  many people fail to store their receipts because   they're too lazy at the time which leads to panic  and stress during tax time trust me I know I used   to be one of these people other people forget  they bought the item in the first place and miss   out on potential deductions to avoid this take  a picture of the tax invoice straight away for   an item you buy during the year and save it in  the my deductions app doing this will make tax   time way easier for you all you need to do during  tax time is open the app and all your deduction   receipts will be ready for you Happy Days capital  gains tax strategy the next way to reduce tax is   understanding how to use capital gains tax rules  to your advantage capital gains tax is a tax you   pay when you sell an asset that has increased  in value in Australia if you hold an asset for   more than 12 months you receive a 50% capital  gains discount when you sell for a profit this   applies to shares investment properties and even  cryptocurrencies for example if you purchase 10   shares of Commonwealth Bank at $100 each totaling  $1,000 and a year later the shares increase to   $120 each making them worth $1,200 if you decide  to sell all 10 shares your capital gains would be   $200 however if you hold on to the shares for over  12 months you can get a 50% discount reducing your   capital gains tax to $100 another strategy is to  lock in your Capital losses to offset your capital   gains in Australia if you sell an asset at a loss  you make a capital loss while you cannot reduce   your taxable income with this loss you can offset  any capital gains you have for example if you also   sold some BHP shares at a $50 loss in addition  to the $100 capital gains from your Commonwealth   shares you could offset the $100 gain gain with  the $50 loss reducing the total capital gains to   $50 some investors sell shares at a loss before  July to lock in the capital losses especially   if they anticipate some large capital gains this  strategy is known as tax loss harvesting and it   can reduce your overall tax liability if used  correctly however please don't try to outsmart   the ATO some of you may be thinking what if I just  sell some shares in June to lock in the loss and   Rey the same shares in July I mean it's a great  idea in theory right one small problem this is   called a wash sale and it is illegal ing to  the ATO you can't sell shares to lock in a loss   and Reby them in a short period of time especially  with a purpose to get a tax benefit however you   can sell some shares then buy some similar shares  for example if you want to sell some War shares   to lock in a loss you could buy some Co shares  to replace them if you still want exposure to   retail it's essential to know how to legally  apply these strategies to save tax please note   these strategies are not appropriate for everyone  so please read through the rules to ensure they   are applicable to you by the way if you're looking  to start investing in shares this year and you're   on the hunt for a good Aussie online broker then  check out Buu they are currently the online broker   I'm using to invest in both Aussie and US Stocks  the great thing about Mumu is that they tick off   all the boxes I look for in an Australian broker  this includes chess sponsorship low brokage fees   for both Aussie and US stocks and they have a  powerful built-in researching tool in the app   that allows me to try to find the next Nvidia  stock and they are currently offering some nice   sign up bonuses for new users right now if you  sign up using the link in the description you   will receive up to 10 free random stocks $22,000  brokage free cards for both Aussie and US stocks   for 30 days which basically means your brokage  fees are covered for the first 30 days days and   you'll receive 6.8% annualized interest on your  uninvested cash for up to $100,000 for 180 days   in addition the mumu app provides numerous free  learning guides on investing in the stock market   making it ideal for beginners however please note  terms and conditions do apply so make sure you   check it out before proceeding I'm not sure how  long this offer will last so if you're interested   use the link below to sign up and claim all the  free rewards on screen the sign up process is very   quick and should only take a few minutes make  extra super contributions the next way to save   tax is to make extra payments into your super  annuation account each time you receive your   salary your employees is required to contribute  approximately 11% of your earnings into your super   account any concessional contributions you make  to your supera are taxed at a rate of 15% which   is typically lower than most people's marginal tax  rate given that most Australians fall within the   third tax bracket making additional payments into  your super can result in significant tax savings   as of July 2024 the new annual concessional  contribution cap will be $30,000 this means   that you can make additional contributions up to  $30,000 per year and still benefit from the lower   15% tax rate please not that the minimum super  contribution made by your employer is included   in this $30,000 cap so it's important to calculate  your numbers carefully to avoid going over the cap   if you have unused cap amounts from previous years  you may be able to increase your contribution caps   in later years please note that unused cap amounts  are available for 5 years and expire after this   period the simplest way to make concessional  contributions is through salary sacrifice you   can arrange this by having a discussion with  your employer typically someone in payroll and   inform them that you would like to contribute  a portion of your pre-tax salary to your super   fund your super Fund invests in similar assets  as those outside of super like ETFs that track   Australian and international shares therefore if  you're considering investing outside your super   anyway salary sacrifice may be a suitable option  if you're interested I have a more detailed video   on salary sacrifice which I'll link down below  spouse super contribution you can also make spouse   super contributions to save on tax this is a good  way to top up your spouse's superpa and save some   tax at the same time if your spouse's income is  less than $40,000 you could claim the maximum   tax offset of $540 by contributing $3,000 to their  supera contributions made to your spouse's superpa   are considered uncon personal meaning they won't  affect the $30,000 concessional contribution cap   for more information including eligibility  conditions please refer to this page for   more information debt recycling the next way  to save tax is the debt recycle debt recycling   works by making extra repayments into your non-  tax deductible home loan and then drawing money   back out to invest when the money is taken out of  debt and used to invest into something like shares   because the new purpose of the borrowing is to  invest the interest payments on this debt becomes   tax deductible in Australia if you borrow money  to invest the interest rate you pay to borrow the   money is tax deductible this strategy can help  homeowners with a mortgage who are looking to   pay down their mortgage invest on the side and  save tax at the same time here's a quick example   let's say you've saved 50k in your offset account  for the purpose of investing in dividend shares   if you directly use this 50k to invest it won't  be tax deductible but if you have a home loan   let's say 500k and you use the entire 50k to repay  some of the loan and then immediately withdraw it   this 50k is now considered borrowed money if you  then invest this 50k into dividend shares this   50k portion of the loan becomes tax deductible  I have a more detailed video about this topic   which I'll link down below if you're interested in  learning more however with this strategy you need   to make sure you set up everything correctly you  don't want to stop mixing up the loans if you're   interested in debt recycling I would recommend  you go see a tax accountant to ensure you set   up correctly because it can be a bit complicated  negative gearing the next way to reduce tax is to   utilize negative gearing when possible negative  gearing occurs when the expenses associated with   an asset is greater than the income from that  asset the resulting loss can be used to lower   the Investor's tax able income providing a tax  benefit typically in Australia negative gearing   applies to an investment property for example  Bailey here earns $100,000 from his job he also   has a rental property that generated $20,000 in  rental income this financial year but he incurred   $330,000 in expenses including mortgage interest  maintenance cost depreciation insurance and other   related costs therefore the investment property  has a $10,000 loss for the Year this $10,000   loss is deducted from Bailey salary of $100,000  reducing his taxable income to $90,000 therefore   baely ends up paying tax on $90,000 instead of  $100,000 which saves him a significant amount   of tax while negative gearing continues to be  a common investment strategy in Australia it's   important to consider the risk and stay updated on  any Law changes that could affect the strategy's   effectiveness with ongoing speculation that the  government May abolish it if you're watching this   in the future please double check to see if  negative gearing is still available and quick   disclaimer I am not a financial advisor and  this is not Financial advice some of the tips   and strategies in this video may not apply to you  so please do your own research to ensure you know   what you are claiming if you are not sure or  have a complicated tax return then please go   see a professional having said all that let's  move on get Private health insurance the next   way to save on tax is by signing up for Private  health insurance in Australia most people are   charged a 2% Medicare Levy if you earn over 93k as  a single person or 186k as a family an additional   1% Medicare Levy search charge is applied this  search charge may even increase if your income   exceeds these thresholds however having an  appropriate level of Private Hospital cover   can help you avoid the sech charge completely  in fact it's often more affordable to pay for   basic Private Hospital Insurance then to pay the  extra 1% search charge if your income is above   these thresholds I would strongly recommend you  consult with several health insurance providers   to find the right coverage for you instant asset  write-off the next way to save tax is to use the   instant asset write-off rule if you have a small  business that turn over less than $10 million   this rule allows for the immediate deduction of  the full cost of eligible assets these assets   must cost less than $20,000 and be first used  or ready for use between 1st of July 2023 and   30th of July 2025 the $20,000 threshold applies  per asset allowing small businesses to write off   multiple assets instantly this rule has been in  effect since 1st of July 2023 and the good news   is they have announced that they will extend it  for another 12 months so that's until 30th of June   2025 so this is great news for small businesses  if you're watching after that date please make   sure you check whether the rule has been extended  further see a tax accountant the next way to save   tax is to go see a registered tax accountant a  good tax accountant could be worth their weight in   gold especially if you have a complex tax return  due to owning a business or multiple Investments   ments and deductions in my opinion there are three  reasons to consider hiring a tax accountant one   they possess expert knowledge and stay updated  on tax laws Australian tax laws are complex and   frequently change accountants stay current with  these changes to ensure compliance and optimal tax   planning they are aware of all the legal loopholes  and methods to maximize your tax return two they   provide a personalized tax strategy tailored to  your needs the tips in this video are generic   and may not apply to everyone a tax accountant  however will assess your financial situation and   develop a strategy to optimize your tax savings  they can identify all possible deductions you're   eligible for including the ones you might miss  and three they save you time and reduce stress   if your tax return is complicated it's best to  let a professional handle it for you this allows   you to focus on other things like spending time  with your family or earning more money you're   not just paying to reduce tax but also for Peace  of Mind knowing your tax return will be efficient   and compliant and remember the fee you pay a tax  accounted to help with your taxes is generally   tax deductible the first home Super Saver scheme  all right I know I said 12 ways but consider this   one a bonus because it's too good to leave out the  first home Super Saver scheme allows you to make   extra contributions into your super fund helping  you save for your first home I know a lot of you   guys are looking to buy your first home so this  will help you save for a deposit faster as well   as saving some tax at the same time as previously  mentioned concessional contributions are taxed at   only 15% with this scheme you can contribute up  to $15,000 per year with a total limit of $50,000   across all years when you're ready to buy your  first home you can contact the ATO to release   your funds they will then instruct your super  fund to release your savings this geme is kind   of similar to salary sacrifice but you don't have  to wait until Pres ation aged to withdraw your   money to qualify you must be at least 18 years  old have never owned property in Australia among   other things to determine if you're eligible and  learn more about the scheme make sure you visit   this page linked in the description by the way  if you're enjoying this video or found it useful   comment the words big tax return down below so  I know who you are and if you're new around here   what are you waiting for mate hit the Subscribe  button and join this awesome Community also   please consider starting up to my free newsletter  Aussie money Club where once a week I'll send you   some money tips major news in the market and  any cool life updates from me and if you're   interested to learn how to do your tax return  yourself for free online then check out this   video on screen where I provide a step-by-step  guide on how to complete your tax return using   my tax and as always thank you for watching I  appreciate you and I'll see you in the next video