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If purchasing a car find out if you can salary package it at work, this will reduce your overall income and therefore push you into a lower tax bracket, I know people that do this all the time!

Anyone have any other tips?

That's actually something I'm hoping to do this year by investing in a car.

I don't have anything to contribute on the tax bracket front, but in tax in general my biggest tip is to learn about your industry and what you can claim. So many people fail to do this and give money to the government, it's practically a donation. One of my friends who knows their industry-claims to a T get's returns in excess of $2000 each year from a part time wage.

Well, here is a really small tip - if you work in the public sector and catch the train to work you can get a rail ticket discounted and deducted from your pay before tax so you get taxed on the lesser amount. Makes a tiny diff but worth knowing. (Applies at least to Vic, Aust - not sure elsewhere)

thats a great tip! now all i need is a job in the public sector...

Just make sure that you do >15,000kms a year, otherwise the personal income tax advantage is wiped out by the FBT you have to reimburse your employer...these are called novated leases which are salary sacrificed. There are some traps and tricks with novating a car lease....if anyone is thinking about it, feel free to contact me.

And if you own your own business and have a business car make sure that atleast half of the odometer is business related :)

There are some traps and tricks with novating a car lease....if anyone is thinking about it, feel free to contact me.

I know who I'll be talking to when it comes time for my next car :) Thanks.

Post by Ollie

Just make sure that you do >15,000kms a year, otherwise the personal income tax advantage is wiped out by the FBT you have to reimburse your employer...these are called novated leases which are salary sacrificed. There are some traps and tricks with novating a car lease....if anyone is thinking about it, feel free to contact me.

How would a novated lease go with a self-employed person?

- paul

salary sacrificing is a great way to reduce your income tax- but not all employers offer this. My salary is worked out as follows- my income is split into two portions, the first lot is my take home salary which puts me in the smallest tax bracket. The second is put into an employee welfare fund which we set up at work. The money from the fund is invested and when i need it is then distributed through a company, which is taxed at the company rate, however i get a tax rebate for the first tax amount i think. And cars etc are all owned by the business though the fringe benefits tax can be a bit of a drama. The way my dad (company director) manages his is by basically making the company pay for everything and leaving the house in my moms name- she paid the mortgage through her job (as an anaesthetist) and the government had set up salary packaging for them. He is a CA so i guess he is good at this stuff but he has a brilliant tax accountant and a very very good solicitor.

salary sacrifice works really works well....especially if you are buying a car, computer, etc....if benefits people who are on the higher end of the tax bracket cuz the more you earn the more you benefit from being tax at the higher tax rate....

ruru - i think the employee welfare fund you are talking about is the super fund...and that works well.....

nah its not a super fund. its an employee welfare fund. super funds cannot be drawn from untill you are 55 and are a completely different entity. this hold the money from whichever of our employees want to put it in, to pool our investment ability, and is not put in through superannuation at all- the money is put in 100% voluntarily and is taxed when it is drawn through the company which draws it. kind of complicated to explain.