One simple trick to increase your weekly take-home income
Here’s the thing that property spruikers and wealth creation “experts” often don’t share.
Blogger: Paul Wilson, Educating Property Investors, We Find Houses and We Find Finance
Sometimes, life just doesn’t go the way we planned it.
You might be on track with your life and investments when you suddenly get thrown a curve ball that looks a lot like:
• Losing your job unexpectedly
• A new addition to the family
• Less overtime work available
• Longer rental vacancies than you had budgeted for
• Extra expenses at your property that have gone beyond your budget
When your circumstances change like this, it can affect your cash flow and make it very difficult to meet the repayments on your loans.
In Australia, it’s possible to use a Tax Withholding Variation Form and have your weekly tax reduced. The idea of this is that you can submit a form to the ATO that projects what your tax return will be, so it can be paid periodically throughout the year in the form of less tax taken out of your pay packet.
In other words, instead of you receiving one lump sum tax return of $5,000 at the end of the financial year, you can receive an extra $100 in your pay packet each week.
You can find the right Tax Withholding Variation form for you via the ATO.
Of course, if you are receiving a portion of your tax return each week, then you will forgo your end-of-financial-year tax refund. But consider that the reverse is also true; you can use the form to pay more tax each week so you receive a bigger lump sum at the end of the financial year, if that suits you.
Whatever you decide, it is important to note these key points:
1. You still need to lodge a tax return if you have been granted a tax variation. Your actual tax liability will be determined when you lodge your tax return and any differences will be sorted out at the end of the financial year
2. A new variation form must be lodged every new financial year
3. If you change employment, a new variation form must be lodged – it will not be transferred
Many property investors who have utilised tax variations have found them to very beneficial to manage cash flow (and often necessary when times are tough).
This article originally appeared on We Find Houses.
About Paul Wilson
Paul Wilson is an Independent Property Investing Expert who's been educating and coaching investors since 2001. Author of 7 Deadly Mistakes Property Investors Make and How to Avoid Them, he also manages www.educatingpropertyinvestors.com.au, www.wefindhouses.com.au, and www.wefindfinance.com.au
Through his books and websites, Paul provides valuable, independent guidance and support by teaching strategies on how you can invest successfully, while protecting yourself from the common mistakes that trap many investors from reaching their full potential.
Paul doesn’t promote cookie cutter strategies, instead he demonstrates how you can create wealth as a property investor regardless of your budget, location, strategy and risk profile.
Paul makes his home on the Gold Coast and spends his leisure time enjoying adventures, surf and sun with his wife and five children.
Protect and grow your portfolio with knowledge. Contact Paul today for a complimentary consultation.
1800 690 890 and ask for Paul, or email [email protected].
