My income had a sudden boost that will exceed the $90K medicare levy surcharge threshold. How do I reduce this year's income to make it below $90K?
Thanks.
How to Reduce Income?
tooblue on 14/06/2016 - 08:42
Last edited 14/06/2016 - 08:43
Last edited 14/06/2016 - 08:43
Comments
I thought MLS was charged at higher income not less deductible expenses.
It's not an expense, it's a deduction which reduces your taxable income.
Quit your job / take unpaid leave for the rest of June.
Make investment losses - e.g. pay interest upfront on a margin loan.
Donate to charity (as already suggested).Or just pay the extra tax? ((more money) * 0.98) is probably greater than (less money)?
Work less
Difficult because the income for MLS purposes includes reportable fringe benefits, net financial investment losses, net rental property losses, reportable employer super contributions and deductible personal super contributions.
If you have a wife or a girlfriend that earns less than you put it in the return as a married or de facto and the combined income threshold jumps to $180kFound on ATO website:
https://www.ato.gov.au/individuals/tax-return/2016/tax-return/medicare-levy-questions-m1-m2/m2-medicare-levy-surcharge-(mls)-2016/Income for MLS purposes
Your income for MLS purposes is your taxable income plus the following if they apply to you:
reportable fringe benefits (shown on your payment summary)
reportable superannuation contributions (which is the sum of both your reportable employer superannuation contributions and your deductible personal superannuation contributions)
your net investment loss (which is the amount by which your financial investment deductions exceeded your financial investment income, plus the amount by which your rental property deductions exceeded your rental property income)
the amount on which family trust distribution tax has been paid.I was thinking to renovate the investment property and confessionally contribute to Super but both seems to be dead end. Is it still time to marry her?
Yes it may be time…
But be careful because it will most likely cost you a lot more than what you save on the medicare levy surcharge ;-)
Buy investment property and show negative gearing.
No. See maxi above.
Tax deductible work related expenses? Best to have a chat with your accountant if you have one as the time is running out.
edit: One thing I can think of is to take out Income protection insurance and pay out the annual premium in one go rather than monthly installments and this will be around the 1K mark or more annually depending on your age and other factors and will increase your work related expenses by 1K and brings down your income by that amount when tallied.
What about just taking out Private Health cover?
Private Health cover cannot back date so still need to pay the MLS for the 330+ days that are not covered.
Too late for the 2015-16 FY.
Will work for next FY if OP's income is again over the threshold
How much are we talking ?
if its not too much, remember its calculated off your adjusted gross income, so after all deductions.
I easily reduce my income by 10-15k every year but I do have a lot of travel expenses so it may not work for you.How much over the $90K will you be? is it in the hundreds? thousands? tens of thousands?
Some of the attempts to reduce your taxable income, like donating to charity, could cost you more than the medicare levy surcharge itself.
Work related expenses is what I do - there's a whole range of them to make use of.
But each person's situation is different so wihtout knowing your specifics, what might be good for me may not be good for you.
Super contribution
salary sacrifice? super contribution?
By working harder and giving it away even harder
Super is good. Up to $30K (including employer contribs) is taxed at 15% and reduces your taxable income.
Perhaps look in to novate leasing a vehicle.
Take out medical insurance, then you are exempt, and insurance can be cheaper than the 2%.
You can lease computers and electronics from Harvey Norman I think, but I don't know much more how this works
Financial advice on how to invest your savings to generate additional income can be deductable. If you're interested, I've got a friend who is a prince in Nigeria that might be able to help. ;-)
Make tax deductible donations to registered charities.