Many Australians ask, “How can I lower my income tax?” As a trusted Gold Coast small business accounting firm that has helped numerous clients, our company feels it’s never too late to organise your tax planning to achieve this objective, minimise risks, and prepare for your financial future.
We strongly recommend that you prioritise and plan your taxes carefully year-round to lessen your tax liability. We also urge you to prepare and update a forecast of income and outgoings to prepare for inevitable cash flow crunches.
This blog will explain several ways for Australians to lower their taxes in 2025. Achieving this goal will help them increase their take-home pay, optimise their savings, improve their long-term financial security, and offer a sense of control and stability.
Deduct Eligible Business Expenses
Individuals can claim deductions for expenses directly related to earning taxable income. You can do this by providing the Australian Taxation Office (ATO) with a record that shows a self-made purchase without a reimbursement.
Give To Charitable Endeavours
Individuals who donate money as a gift may receive a tax deduction for charities given to organisations with deductive gift recipient (DGR) status. The gift must be money or property and considered a voluntary contribution where the donor receives no material benefit.
Establish A Mortgage Offset Account
A mortgage offset account enables homeowners to minimise their non-deductive loan interest by offsetting it with the interest earned on funds in a linked deposit account.
This setup allows Australians to create a savings account with their lender by paying interest on the loan without the savings account amount. This scenario prevents homeowners from paying interest on the entire home loan.
Postpone Income Payments
You can lower your tax in 2025 by postponing income payments after 30 June so you do not pay taxes for the current fiscal year. This strategy will help reduce your taxable income for the current financial year.
Pay Expenses In Advance
Paying up to twelve months of tax-deductible expenses in advance may make the tax reduction eligible for the current fiscal year. For example, you can pay interest on an investment loan in advance to take advantage of this opportunity.
Consider Salary Sacrificing
Salary sacrificing is a setup where the employee agrees to relinquish part of their pre-tax salary in exchange for non-cash advantages, including the following:
- Superannuation contributions
- Car leasing
- Electronic devices
- Childcare costs
- Work-related expenses, including uniforms and equipment
Since salary sacrificing helps reduce taxable income, it also minimises income tax payable for 2025 and beyond. You will also benefit from convenient payments for arrangements such as car leases and superannuation contributions, making the process more manageable and less stressful.
Contribute As A Spouse
Spouses with higher incomes can minimise their taxes by contributing a portion of their superannuation funds to their partner’s super account.
You could be annual for a yearly tax offset of up to 18% with a $540 cap on the first $3,000 you contribute, depending on your spouse’s annual income.
Utilise Personal Super Contributions
Australians who make annual personal contributions to their superannuation funds may qualify for deductions.
The government requires the incomes of individuals claiming deductions for personal superannuation contributions to be generated from salary and wages. They can also create income from other sources, including the following:
- Personal businesses
- Investments, including investment properties, shares, and securities
- Government pensions or allowances
- A foreign source
- Trust distributions
Remember that claiming this amount as a tax-deductible expense means your superannuation pays a 15% tax rate.
Organise Your Investments
As trusted Gold Coast tax accountants with extensive industry experience, we strongly recommend asking your trusted financial professionals for advice before investing.
To achieve optimal results, each funding source must produce short- and long-term advantages. Saving minimal tax now is useless if your investment loses its initial capital.
Sold shares or profitable investments entail tax payments. You can minimise these taxes by reducing assets that have decreased in value over time.
Be careful when selling these precarious investments and repurchasing them at the end of the fiscal year (a process known as tax-loss harvesting) because transaction fees could substantially diminish possible tax advantages.
Avail of The Private Health Insurance Tax Offset
The ATO’s private health insurance tax offset helps middle- and high-income Australians minimise public health system dependence and enhance the private healthcare sector’s long-term viability.
You must meet the following criteria to receive the private health insurance tax rebate:
- Must be an Australian citizen
- Earn a taxable income of less than $150,000 as an individual or $302,000 as a family
- Must have a compliant health insurance policy
- Must have a Medicare card
You can claim the rebate either by obtaining a discount on your premium or claiming it through your tax return.
Take Advantage of CGT
The Australian government applies capital gains tax (CGT) on profits from selling assets acquired after 20 September 1985. Unlike several countries, Australia doesn’t use a distinct tax rate for capital gains. Instead, taxable income includes capital gains, which are taxed according to your marginal tax rate.
Australian resident individuals who have owned an asset for at least 12 months earn a CGT discount of 50%. The government only adds half of the capital gain to their taxable incomes in these scenarios. For instance, for a capital gain of $10,000 on an asset held for over a year, only $5,000 would be included in taxable income.
Compliant superannuation funds can claim a 33.3% discount for assets held for over 12 months. Unfortunately, companies are ineligible for the CGT discount. They must include the entire capital gain amount in their appraisable income.
The precise capital gains tax will hinge on the individual’s or entity’s overall taxable income and applicable tax rate. The ATO will progressively tax your capital gains, aligning with the country’s income tax system.
Contact Us
“How can I lower my tax bill?” is a question many Australians ask. Following the tips above will help you get started in the right direction.
Exhaustive, comprehensive tax information helps people make better financial decisions. Seek the advice of a reputable, trusted professional whenever you’re creating a tax plan to maximise tax savings and comply with stringent ATO regulations.
This strategy will help you stay informed and become more confident in your financial endeavours.
Contact us if you require assistance with maximising tax refunds. As the Gold Coast’s trusted tax accountants, we can answer your enquiries and provide timely advice regarding your situation.
