Minimising Tax

One might hope that governments would steward tax revenue prudently and keep spending to the essentials. In reality, however, like any large institution, they tend to protect and expand their own interests above everything else.

Recent decades have shown a pattern of fiscal imprudence at best and indifference toward taxpayers’ needs at worst.

High-net-worth individuals exploit every legal avenue to minimise their tax burden—and you should, too. Bear in mind, though, that the strategies outlined here may be reshaped by future policy changes. With growing scrutiny on hefty superannuation balances and retirement ages steadily rising, it pays to plan carefully and remain vigilant.

 Below are the Australian resident tax brackets for the 2025/2026 period, excluding the 2% Medicare levy.

Taxable Income Tax on This Income

$0 – $18,200     Nil

$18,201 – $45,000          19¢ for each $1 over $18,200

$45,001 – $135,000        $5,092 plus 32.5¢ for each $1 over $45,000

$135,001 – $190,000     $31,288 plus 37¢ for each $1 over $135,000

$190,001 and over          $51,627 plus 45¢ for each $1 over $190,000

Example calculation for a $150,000 taxable income:

Base tax on first $135,000 = $31,288
Plus 37¢ × ($150,000 – $135,000) = $5,550
Total tax = $36,838
Medicare levy (2%) ≈ $3,000

Make sure you claim deductions and offsets

Ensure you claim every legitimate expense related to earning income.

  • Work-related expenses
    • Home office running costs (electricity, internet, depreciation on equipment)
    • Tools, uniforms and protective clothing
    • Travel and vehicle costs for work duties
    • Professional development courses directly linked to your job
  • Investment-related expenses
  • Interest on loans for property or share investments
  • Property maintenance, repairs and depreciation
  • Financial advice fees and investment management costs

Superannuation Contributions

Superannuation offers one of the most effective tax minimisation tools for Australians.

  • Concessional contributions (salary sacrifice or personal deductible) are taxed at 15%, often below your marginal rate
  • Spouse contributions and government co-contributions can provide additional tax offsets
  • Catch-up concessional contributions allow you to use unused cap space from prior years if your super balance is under $500,000

Charitable Donations

Supporting registered charities (deductible gift recipients) not only does good but also reduces tax.

  • Donations of $2 or more to DGR-registered charities are tax-deductible
  • Bundling multiple years’ donations into one financial year maximises deductions in high-income years

Private Health Insurance Rebate

The private health insurance rebate is an Australian Government incentive that reduces the cost of private health insurance premiums for eligible policyholders. It is income tested and applies to hospital, general treatment and ambulance policies provided by registered Australian health insurers. Policies covering overseas visitors and the Lifetime Health Cover loading component are excluded from the rebate

Timing Income and Expenses

Shifting income and accelerating deductions can smooth tax bills across financial years.

  • Defer invoicing or delay bonuses into a lower-income year
  • Prepay deductible expenses (interest on investment loans, rent, insurance, subscriptions) before June 30
  • Bring forward repairs and maintenance to claim expenses sooner

Capital Gains Tax (CGT) Planning

Smart CGT management preserves wealth when selling assets.

  • Hold assets for at least 12 months to qualify for a 50% CGT discount on gains
  • Offset gains by realising capital losses (sell underperforming assets)
  • Avoid making obvious wash trades —artificially selling and repurchasing—to reset your cost base. For example selling shares on June 30th and buying them back 1 July will be a red flag to the tax department.

Small Business Strategies

Choosing the right structure and write-off methods can slash a small business’s tax.

  • Business structures

o             Sole trader, partnership, company or trust each have unique tax outcomes

o             Private companies benefit from a flat 25% tax rate on profits

  • Income distribution

o             Use family trusts to allocate profits to beneficiaries in lower tax brackets

  • Asset write-offs and depreciation

o             Instant asset write-off for eligible purchases

o             Depreciation on vehicles, machinery and equipment using ATO rates

  • Prepay expenses before year-end to bring forward deductions
  • Write off bad debts that are genuinely unrecoverable
  • Pay employee superannuation by quarterly deadlines to claim deductions and avoid penalties
  • Keep accurate records and use accounting software for compliance and optimisation
  • Consult a tax professional for tailored advice

Using Assets and Debt: The “Buy, Borrow, Die” Strategy

I’ve seen this strategy promoted a lot recently as a way to “do what the rich do”. It’s sold as a win win where you get to keep the underlying asset while living on borrowed money that doesn’t incur tax. As long as the underlying asset keeps appreciating you can keep living on debt, or using that debt to buy more assets. Sounds great until it isn’t. Personally I hate debt. Even “good” debt can go south very quickly. It’s called leverage and can help you on the way up and destroy you on the way down. Get financial advice from a qualified professional before sailing off into that particular stretch of water!

How it works

This approach lets you access cash without selling assets and triggering CGT.

  1. Buy: Acquire appreciating assets (property, shares or even bitcoin).
  2. Borrow: Use those assets as collateral to borrow, avoiding a CGT event.
  3. Die: Assets pass to heirs—though Australia does not grant a full step-up in cost base on death for post-1985 acquisitions.

Benefits and caveats:

  • Access liquidity without selling assets
  • Potentially deduct interest on investment-purpose loans
  • Risks include ATO scrutiny if borrowing from your own private company, margin calls if asset values fall and disallowed interest deductions if funds are used personally
  • It assumes the rules don’t change and as we’ve established, governments can’t leave things alone for long.
  • BEWARE LEVERAGE (using debt to increase profits)

General Strategies for Individuals & Small Businesses

  • Prepay expenses: investment loan interest, insurance premiums, subscriptions by June 30
  • Negative gearing: offset investment property or share losses against other income
  • Salary packaging: use pre-tax salary for super contributions, novated leases, laptops and other work items
  • Investment bonds: tax-paid products that become tax-free after 10 years
  • Franking credits: invest in shares with fully franked dividends to claim credits for company tax already paid

Advanced Strategies for High-Income Earners

  • Family trusts with corporate beneficiaries: distribute income to both individuals and companies taxed at 25–30%
  • Private ancillary funds: create charitable foundations for deductible giving while retaining control
  • Catch-up concessional contributions: use unused super caps from prior years if under $500,000
  • Income splitting: legitimately employ or co-own assets with lower-tax-bracket spouses or family members

Changes to Watch

Governments rarely leave things untouched. Their instinct is to extract as much wealth as they can get away with—and they’re not shy about rewriting the rules to do it. 

Expect potential changes to:

  • How income from trusts is taxed
  • The age at which you can access your superannuation
  • The capital gains tax discount
  • The rules around negative gearing—a strategy where investment costs (like interest on a rental property) exceed income, allowing you to offset the loss against other taxable income

These levers have all been tweaked or debated recently. That makes it difficult to build a confident 30- or 40-year retirement plan when every election could bring a new set of rules. Assume they’re not there to protect your savings—and plan accordingly.

Implement strategies that suit your situation

Keep detailed records

With smart planning and full compliance, you can legally minimise your Australian tax and redirect those savings toward growth and retirement.

Although this site primarily deals with the Australian system, many of these things may be very similar in your own country. In fact you may even have even more opportunity to save on tax.

Seek professional advice when needed