There is no secret. The Australian tax system has a short list of levers that lawfully lower what an individual pays, a longer list of things that look like levers but aren't, and a very clear line between planning and avoidance. Here is the honest version, with the 2026–27 figures.
The levers that work
Personal deductible super contributions
Contribute to super and claim a deduction, within the concessional cap of $32,500 for 2026–27 (including employer super). The contribution is taxed at 15% in the fund instead of your marginal rate. Lodge a notice of intent with the fund before you lodge your return. If your balance was under $500,000 last 30 June, unused cap from the last five years can be added.
Claim what you are entitled to — or the $1,000 standard deduction
From 2026–27 you can claim a flat $1,000 for work-related expenses with no receipts, or itemise with full records. Itemising wins for people with real costs: tools and equipment, protective clothing, registrations, union fees, self-education tied to your current job, working from home at 70c an hour with a record of hours, car use on a logbook or 91c per kilometre up to 5,000 km. Donations, income protection premiums and the cost of managing your tax affairs are claimed separately on top.
Time income and gains across years
Tax is annual and the rates are progressive. A capital gain realised in a year when your income is lower — between jobs, on parental leave, in retirement — is taxed at a lower rate. Selling a loss-making investment in the same year as a gain offsets it. Invoicing (for sole traders) and bonuses sometimes have a few weeks of flexibility either side of 30 June. The 1 July 2027 CGT change adds a reason to look at timing now.
Hold investments in the right name from the start
Income and gains follow legal ownership. An investment bought in the lower-earning partner's name, or in a structure suited to the family's situation, is taxed at that owner's rate every year and on sale. Moving an asset later triggers CGT and often stamp duty, so this is a decision made before the purchase, not after.
Private hospital cover above the surcharge threshold
Singles earning over $105,000 and families over $210,000 (2026–27) pay the Medicare levy surcharge of 1% to 1.5% unless they hold appropriate private hospital cover for the full year. Above the threshold, basic hospital cover usually costs less than the surcharge.
Offsets you may already qualify for
The low income tax offset is automatic. The small business income tax offset (16% of tax on business income, up to $1,000) applies to sole traders with turnover under $5 million. The spouse super contribution offset (up to $540) applies if your spouse earns under $40,000 and you contribute to their super. Seniors and pensioners, zone residents and people with private health insurance have their own.
Investment property, done properly
Every deductible rental expense claimed, depreciation from a quantity surveyor's schedule, borrowing costs over five years, and a cost base kept from day one so the sale is taxed on the right figure. Negative gearing continues for property held at 12 May 2026 and new builds; established property bought after that is quarantined from 1 July 2027.
Salary packaging where it genuinely fits
Employees of public hospitals and charities can package up to $9,010 or $15,900 of ordinary expenses FBT-free. An eligible electric vehicle on a novated lease is exempt from FBT. For everyone else, packaging a petrol car or other benefits is often close to neutral once FBT and costs are counted.
What doesn't work
Planning versus avoidance
The ATO's test is substance. Contributing to super, buying an asset in your partner's name, selling in a low-income year, claiming a deduction the law provides — all have a real effect beyond tax and are what the rules are designed for. Arrangements that are artificial, circular or exist only on paper fail the test however they are labelled. A registered tax agent is obliged to tell you which side of the line you are on; that is part of what you are paying for.
Where to start
Run your figures through the income tax calculator to see your marginal rate — that is the rate every lever saves at. Then, if you run a business, work through the EOFY tax planning checklist; if you're an employee or investor, the three questions are super, timing and ownership. A planning meeting before 30 June puts numbers on each.
Sources
- ATO — Deductions you can claim; Personal super contributions; Contributions caps
- ATO — Medicare levy surcharge; Tax offsets; Tax avoidance and Part IVA
General information for 2026–27, current at 30-10-2026, not advice. SMT Accounting does not hold an Australian financial services licence; super and investment decisions involve financial product advice, which we do not give.
Frequently asked questions
What is the single biggest legal way to reduce tax?
For most employees and sole traders, a personal deductible super contribution. Money contributed within the $32,500 concessional cap (2026–27) is deducted from your taxable income and taxed at 15% in the fund instead of your marginal rate — a saving of 17 to 32 cents per dollar for people in the 30% to 47% brackets. The trade-off is that it is locked away until retirement, so it is a financial decision as much as a tax one.
Should I claim the $1,000 standard deduction or my actual expenses?
From 2026–27 you can claim a flat $1,000 for work-related expenses without receipts, or itemise with full substantiation. Itemise only if your genuine work expenses exceed $1,000 — a tradie with tools and a ute, a nurse with registration and uniforms, someone working from home full-time usually will; many office workers will not. You cannot do both.
Can I reduce tax by putting income in my partner's name?
Only where the income genuinely belongs to them. Investments can be bought in the lower-earning partner's name from the outset, and that is legitimate planning. Shifting salary, or assigning income from your own work to someone else, is caught by the personal services income rules and the general anti-avoidance provision.
Does negative gearing still reduce tax?
Yes, for property held at 7:30 pm on 12 May 2026 and for new builds. For an established property bought after that date, from 1 July 2027 the loss can only be offset against residential property income and is carried forward. Our negative gearing explainer and calculator cover the detail.
Is salary sacrificing a car worth it?
A novated lease moves car costs before tax and can suit people who would run a car anyway, especially an eligible electric vehicle that is exempt from FBT. For a petrol car the FBT, the employee contribution and the lease's own cost often cancel most of the benefit. It needs your own numbers, not a brochure.
What does the ATO consider tax avoidance?
Arrangements entered into mainly to obtain a tax benefit with no commercial substance: artificial income splitting, round-robin payments, claiming private expenses, backdated documents, trust distributions to people who never receive the money, and promoted schemes. Part IVA lets the ATO cancel the benefit and add penalties of up to 50% of the tax, plus interest. If a strategy only works because of the tax outcome, it is probably caught.