Hello everyone, I have a situation where I have to pay a lot of taxes this year. The interest earned on the money that was feared in the bank has been paid as interest without paying taxes. Please note I have paid off home loan and waiting for an investment property to buy.
Need your advice or Anyone here with paid tax expertise?
Thanks
My salary just over six figure and falling under 33% tax bracket. I earned $50K in interest but No interest deducted by my bank due to the accounts transferred from CITI bank when they close the retail banking , Paying additional amount to super is one of the way to reduce my tax , Is there any other option available for me?
So $16.5k in possibly tax just on the interest.
Time to spend big and buy something you can claim on tax - TV, Computer, something that falls under your job and is easy to claim without too many questions.
Or you can pay it to super……. but why not have something fun to use now?
@TAN: https://www.amazon.com.au/Rokinon-DS35M-C-Frame-Angle-Canon/…
there's a used one available for $162. that may help for your cine plans.
@FoxJump: Thanks for your suggestion, currently I am working in the finance and It is not work related expenses, BTW I have already bought a RED cinema gear bundle.
currently I am working in the finance
You work in Finance but you didn't work out that you needed to pay tax on interest? And then you're asking for help on the Internet?
BTW I have already bought a RED cinema gear bundle.
This is a troll surely… Do you have a script? Or do you plan to write that too?
@1st-Amendment: @1st-Amendment
Finance is a very large field. Not every one that works in finance knows about tax law. In fact, not everyone that works in finance knows about finance.
Yes, additional super contributions is a good option. A better option is to set up a consulting company in Vanuatu which then bills you $50k for "consulting" or "training". Your consulting company can then buy $50k crypto and give you the wallets to be used anonymously. If you don't like crypto and prefer something more old fashioned, take a holiday in Vanuatu and bring the $50k back as cash. Split the cash into <$10k amounts to be brought in by family members if you want to avoid reporting obligations, or simply smuggle it down your undies or something. Voila! $50k tax free apart from a few accounting fees in Vanuatu.
Yes, additional super contributions is a good option
This is the best option for most regular people. You get the double whammy of much lower tax AND compound interest over the long term. There's not much that beats that for the casual investor.
A better option is to set up a consulting company in Vanuatu which then bills you $50k for…
Not sure this is a better option, the cost and effort would be more than the $16k savings. These things only work once you are in turning over serious dollars when the savings are higher than the cost.
Why Vanuatu? Is that a tax haven?
50k in interest is wild, inflation or not.
If you earn't 50k then you have around $1,000,000 in the bank. Get the hell of ozbargain and go speak to a bloody accountant
where I have to pay a lot of taxes this year
What are we talking here? $50? $500? $5000!? $50k!?
The interest earned on the money that was feared in the bank has been paid as interest without paying taxes
That is how bank interest works…. You get the interest in full to earn even more interest as the year goes on but then at tax time you pay the tax owed.
Would you rather the bank withholds 30% of the interest for tax each month?
Need your advice or Anyone here with paid tax expertise?
Take money out of your savings account to pay for your tax bill. Live a happy life. There is no major 'tax saving' deduction that can be applied in your case.
My salary just over six figure and falling under 33% tax bracket. I sold my investment property and waiting for to buy another. I earned $50K in interest but No interest deducted by my bank due to the accounts transferred from CITI bank when they close the retail banking , Paying additional amount to super is one of the way to reduce my tax , Is there any other option available for me?
My salary just over six figure and falling under 33% tax bracket
Sounds good, then they should have taken enough tax out to cover that income stream.
I sold my investment property and waiting for to buy another
So cashed up, claim what deductions you can left from your IP.
I earned $50K in interest but No interest deducted by my bank due to the accounts transferred from CITI bank when they close the retail banking
That is how it is, banks don't deduct 'tax' from your interest, its up to you to pay/settle at tax time. So you now have an extra $50k of taxable income that you haven't paid tax on @ 33% so around $16-17k.
Paying additional amount to super is one of the way to reduce my tax
Yes it is one way to lower your taxable income, assuming you don't want to see that money until retirement and you don't go over the allowable additional amount/year. But that is also taxed @ 15%.
Is there any other option available for me?
To lower your taxable income, you need to have VALID tax deductions. There is no magic, reduce your tax by $50k item you can claim to wipe away that interest debt.
banks don't deduct 'tax' from your interest
Of course they do. Well legit ones do at least. I have years of bank statements to prove this
There is no magic
Any sufficiently advanced technology is indistinguishable from magic - Arthur C Clarke
And in Tax law, there are plenty of tricks.
Of course they do. Well legit ones do at least. I have years of bank statements to prove this
Point me in the direction of a high interest savings account that takes out tax for you.
And in Tax law, there are plenty of tricks.
There are, but most won't apply legally to a PAYG employee who has a extra $50k in taxable interest to wipe away.
Point me in the direction of a high interest savings account that takes out tax for you.
I use this one: https://www.commbank.com.au/banking/goal-saver.html
Each month I get an interest credit, then a Withholding Tax deduction.
Each month I get an interest credit, then a Withholding Tax deduction.
LOL So you haven't provided your TFN to them….
The Bank is authorised under the taxation laws to collect a Tax File Number (TFN), an Australian Business Number (ABN) or an exemption code. It is not an offence if you don’t provide a TFN, an ABN or an exemption code, but by law, we may be required to withhold a portion of your interest earned on the account.
So you agree that they do take tax out then? You accept that you got that wrong?
Slow clap, you won the internet……
But yes if you are special and don't provide your bank with a TFN then they will take out the maximum tax rate payable for you which you have to then claim back at tax time.
Too bad you're missing out on compound interest over the year from doing that, but you know, you do you.
I don't keep the money in there for a year. Interest on cash is a lousy way to make money. But you know, you do you.
It doesn't matter how long it is in there. Your way means they withhold 50% of the money until you do your tax.
@JimmyF: You:
Too bad you're missing out on compound interest
Also you:
It doesn't matter how long it is in there
It does if you're talking about "compound interest" which you were.
Your way means they withhold 50% of the money
47% actually. Which is almost the same 45% I pay anyway except I have no surprises at EOFY.
@1st-Amendment: Banks only withhold tax if you haven't supplied a TFN. I have years of bank statements to prove this.
Solution for next year (obviously too late for this year): open new HISA, but don't provide TFN to the bank. Bank will deduct 47% tax from the interest. As OP will be on lower tax rate, will get a decent refund from tax return. So instead of paying ~$16k tax, will get ~$7k refund. Problem solved hey?
@Zodiacmindwarp: I guess you missed the hidden /s tag. Which was quite reasonable on your part, as I didn't include it. :-)
Has hallmarks of a troll post but
If you sold your investment property this FY then interest on the $50k is the last of your worries .
CGT on the sale might give you a black eye .
If that pushes you into the Div 293 territory , then concessional contributions are not of much use .
On 33% bracket if you were getting FBT's or CCS ,or FTB's that would need to be factored in as well.
Why would you ask a collection of randoms these questions, ask your accountant , thats what their job is.
Bought a 150K car when in the 33% tax bracket? Yeah- troll post.
What's the actual question?
ChatGPT says:
The person's question is seeking advice on how to handle their tax situation. They mention that they have earned interest on money in the bank, which has been paid without accounting for taxes. Additionally, they have paid off their home loan and are waiting to buy an investment property. They are looking for advice or expertise on managing and possibly minimizing their tax obligations.
My salary just over six figure and falling under 33% tax bracket. I sold my investment property and waiting for to buy another. I earned $50K in interest but No interest deducted by my bank due to the accounts transferred from CITI bank when they close the retail banking , Paying additional amount to super is one of the way to reduce my tax , Is there any other option available for me?
you can donate to a charity
Yes I have done it and planned to another one.
Gather this is just some sort of wierd troll as you just paste the same reply in for everyone.
What's the actual question?
Help me do tax fraud to save paying tax on $50k in interest?
Help me do tax fraud
Minimising tax is not fraud. The rules are the rules and if you can find a way within the rules to minimise your tax then there is no fraud.
Do you claim deductions? It's the exact same concept.
Do you claim deductions? It's the exact same concept.
Yes I claim the legal deductions for the money I earn…..
But sure, if you want to end up like this guy then claim away all your like!
Yes I claim the legal deductions for the money I earn…..
So OP is just asking for what legal deductions might be available to him, that is not fraud. Super contributions is the most obvious example. 15% beats 33%.
So OP is just asking for what legal deductions might be available to him, that is not fraud. Super contributions is the most obvious example. 15% beats 33%.
Correct, but outside of super contribution which will lower the tax payable, which BTW the OP could have done anyhow, there isn't any magical deduction to make the $50k taxable income disappear that the OP couldn't have already been claiming.
"Please note I have paid off home loan and waiting for an investment property to buy."
What has that got to do with your question about paying tax on interest earned from your bank this financial year? Just a weird flex?
I thought everybody here has a paid off 5 bedroom house and six figure bank account.
Honestly paid off 4 bedroom house and 7 figure plus in a specific high interest saving account.
My salary just over six figure and falling under 33% tax bracket. I sold my investment property and waiting for to buy another. I earned $50K in interest but No interest deducted by my bank due to the accounts transferred from CITI bank when they close the retail banking , Paying additional amount to super is one of the way to reduce my tax , Is there any other option available for me?
Yep, easily achievable if you make just over $100k on paper a year working in finance apparently.
CGT has entered the chat…
Catch up super contributions for 2018/2019 as they will disappear after this fy.
Pretty easy maths regarding tax saving/investment return, assuming you can live without those funds until retirement period
Is it possible to add supper to the previous financial year?
How about checking out the articles on ATO's website? You can log into myGov -> ATO to check your current carried-forward cap.
Thank you I will check it.
LOL NO! I would love that as well.
You can 100% do this. The ATO website shows you how much you have left to overpay….
@Davelovesdealz: You mean carry over cap like others have said above? I dont plan to work until im 67 and dont want my money locked away for 20 plus years.
@mrvaluepack: You might regret that decision in 20+ years.
You'll wish any appreciating asset other than PPOR had been bought in super.
Super is undoubtably the best place to accumulate wealth, and for the record, you can access it from 55, not 67.
@SlickMick: I can only access at 60. The government can flip flop at any time regarding super rules and tax rates and your money will be stuck there until then. This is risky for me. I want control now.
@mrvaluepack: Your right - I've been given some bad professional advice that I could start a TTR. I just checked and even for that you need to reach preservation age.
Your call on not trusting the gov, but the reward far outweighs the risk IMO.
Hilarious replies by op, copy and paste this big paragraph here and there. We read everything, no need to copy and paste :).
If you have spouse and earnt lower, you can arrange the saving to the other person, but I guess it's too late now, it's for July onwards.
Thanks for your reply , My spouse is falling under the same tax bracket.
Don't know if this is your thing; There is this share investing for example with AFI that whenever you earnt a dividend to be reinvested, will not resulting 'an income's.
The other thing is obviously to just buy invesment property.
Income from dividends should be included in your taxable income. When you reinvest dividends its actually two transactions (Income plus Share purchase).
Buy lots of $299 items that you can claim for work/business use.
That's not how it works. The total should be less than $300. Not each item.
They are saying $299 because expenses over $300 must be depreciated, so only part of the expense is recognised.
The $300 limit on expenses with limited documentation is separate.
My salary just over six figure and falling under 33% tax bracket. I sold my investment property and waiting for to buy another. I earned $50K in interest but No interest deducted by my bank due to the accounts transferred from CITI bank when they close the retail banking , Paying additional amount to super is one of the way to reduce my tax , Is there any other option available for me?
I'm confused. Can you repeat the answer please?
My salary just over six figure and falling under 33% tax bracket. I sold my investment property and waiting for to buy another. I earned $50K in interest but No interest deducted by my bank due to the accounts transferred from CITI bank when they close the retail banking , Paying additional amount to super is one of the way to reduce my tax , Is there any other option available for me?
That makes more sense. Cheers
@MS Paint: What about this with the help of chatgpt
I earn a six-figure salary and am in the 33% tax bracket. I sold an investment property and am planning to buy another one. I earned $50K in interest, but no tax was deducted because my accounts were transferred from CITI bank after they closed their retail banking. I'm considering paying extra into my superannuation to reduce my tax. Are there any other options available to me?
Honestly I have learned a lot from this ozbargain community. There are many knowledge-based and technology-oriented people here. Their advice from time to time has been very helpful to me. This OZBARGAIN has been one of the main reasons for my savings over the past 18 years. Even though I work in finance, I had a tax-related question here before. Sorry if there is any mistake in what I posted.
Have you thought about buying an investment property?
Max out your $27,500 concessional super contribution.
Thanks for your suggestion , I think It is only 15% tax for the additional super contribution.
as well any any unused contributions from the previous 5 years
Honestly I have learned a lot from this Oz bargain community. There are many knowledge-based and technology-oriented people here. Their advice from time to time has been very helpful to me. This OZBARGAIN has been one of the main reasons for my savings over the past 18 years. Even though I work in finance, I had a tax-related question here before. Sorry if there is any mistake in what I posted.
Honestly, "salary just over six figure". Is that more or less than 105k?
Less than 105K
So you are working in the finance and don't know how interest is taxed?
Please tell me your company name to avoid it at any cost…
I am not trying to steal or escaping from the tax liability , I am just asking if there is a way to reduce tax as per law. I don't need to joke about my work or the company I work for. Did you know that more than 90% of people working in finance or accounting go with another tax accountant for their tax return?
Don't forget that even the finance ministers of countries may have advisors that doesn't mean they can't be finance ministers.
Maybe use some of the million dollars in cash to pay the tax. Or perhaps make a sizable charitable donation to reduce your tax.
Donate all the interest earned to charity. You don't need to pay a cent tax on it.
Problem solved!
It won't really solve the problem as the charities will still keep asking for more money.
You can max out your $27,500 concessional super contribution and top up your unused cap amounts from the last 5 years (you can see how much unused cap is available to you on the ATO website). The deadline is soon to make extra contributions.
Your spouse should quickly set up an accounting practice and charge you $50k in fees.
OP doesn't know how interest works….and sounds like they don't know how capital gains tax works either. They might be in for a fun tax time!
$10,00,000
OP is these post for flexing?
From facts:
• You have earned 50k in interest. (You must have around 900k to 1 million in bank)
• Paid of your house.
• You work in financial sector.
• 6 figure salary.
Quick solution. Donate the money to Scrooge Mcdeal foundation. And you won't need to pay any taxes.
I have a situation where I have to pay a lot of taxes this year
Good
OZB is becoming a truly depressing place for us poor people with all the millionaires in it.
Take solace in the fact that old mate (who I do honestly believe isn't making shit up) is to dense to use an actual accountant and instead comes to ozbargain for advice on how to get as close to the tax fraud line as possible without going over.
Similar situation to you albeit higher tax rate and lower interest amount earned than you and I am going to make extra contribution to super. Did the same last year as well but I am in my early 40s so preservation age is not that far away
How much bank interest are we talking? And remember you only pay a percentage based on your income tax bracket.