Tax offset provides a way of reducing the amount of tax one has to pay at the end of the fiscal year. Companies and individual across the world use this method to lower their payable tax.
The general rule of thumb is that for each dollar of tax offset, there is a reduction of one dollar from your tax, not considering whether your taxable incomes is very small or in millions. In some cases, the tax offset can reduce your payable tax to zero, but if the value goes even below that, you will not be entitled to a refund. Additionally, this offset will also not cover up for any medical levy in your name. This can however be attained by a special type of tax offset called the refundable tax offset.
To make this concept clearer, let us consider a case in which the taxable amount is $ 3100, with a Medicare levy $ 100, and a tax offset of $ 4000. In this arrangement, you can have the relaxation of $ 3000, but will still have to pay $ 100.
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Tax deductions are the things which are exempted from taxation and the amount you spend on acquiring them are deducted for the total taxable income. Examples of these deductions are depreciation in the cost of a property, expenses incurred while carrying out a trade, cost of goods sold, entertainment related expenses etc. In short, tax deductions are allowed on expenses that indicate an immediate benefit.
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