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As the saying goes, “the only thing certain in life is death and tax.” And while we all whinge and carry on about
paying the taxman a seemingly huge portion of our income, taxes are a necessary part of western society. And have been for
centuries!
Tax is raised from our income, as a sales tax or GST on goods and services, as levies for particular
services, fringe benefits taxes and corporate taxes – the list goes on. Pretty well any money we spend or earn has a
taxation component attached to it.
Taxes are raised and spent by the government and are used to fund a wide range
of seemingly ‘free’ public infrastructure and services, including: - Roads and subsidies for other infrastructure
for water supply, wastewater treatment, transport, power and telecommunications networks.
- Hospitals and health services,
including aged care.
- Education and child development services.
- Defence forces.
- Welfare services.
- Salaries
for government employees and politicians.
So taxes are a vital part of society – how else could the above services
be provided? And we all use these services from time to time, so in all fairness we should contribute to their cost.
But, it is also important to only pay what you need to pay. Tax laws and regulations are determined based on what is reasonable
for you to pay – so just make sure that this is all you end up paying and no more.
Tax minimisation or optimisation
is just about making sure you’re paying the right amount of tax by taking into account your legitimate expenses and
earnings. So make sure you keep accurate and up-to-date records of ALL your income and expenses – you may be able to
claim work, business, education, childcare and health expenses on your tax return. You may also be able to claim charity donations
as a tax deduction.
But the main thing is that it is important to understand the tax laws in your particular country
as they are all different – and the best way to do this is see a taxation consultant or financial advisor and get some
advice on the best tax optimisation strategies for you and your family.
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