16 Smart Ways to Reduce Personal Tax Australia 2025
- Future Accounting
- May 1
- 6 min read
Updated: Aug 13
How to reduce personal tax in Australia for 2025: 16 proven strategies
HOME OFFICE EXPENSES
If you have been working from home, you may have expenses you can claim a tax deduction for. The ATO allows you to claim using a “Revised Fixed Rate Method” an amount of $0.70 per work hour for the 2025 year. This amount covers most expenses from working from home, and you need to keep a detailed record of how you calculated the number of hours you are claiming. You can also claim expenses using an “Actual Cost” method – so please keep all invoice and receipts during the entire year to prove all claims. This simple step can help you reduce personal tax Australia 2025 without complicated paperwork.
SUPERANNUATION CONTRIBUTIONS
While you might not be flush with cash now and able to put large amounts into superannuation, it’s important that you are aware of what is possible to maximise your super balance and possibly reduce your tax at the same time.
DEDUCTIBLE SUPER CAP OF $30,000 FOR EVERYONE
The tax-deductible super contribution limit (or “cap”) is $30,000 for all individuals under age 75. Individuals need to pass a work test if over age 67.
To save tax, consider making the maximum tax-deductible super contribution this year before 30 June 2025. The advantage of this strategy is that
superannuation contributions are taxed at between 15% to 30% compared to typical personal income tax rates of between 32% and 47%.
CARRIED FORWARD CONTRIBUTIONS
Carry-forwards of contributions are not an new category of contribution, but rather new rules enabling super fund members to access any of their unused concessional contribution cap on a rolling five-year basis.
This also means that unless you contribute the full amount of your concessional cap ($25,000 in 2020–2021 and $27,500 in 2022–2024), you may be able to transfer the unused amount and benefit from it up until five years afterwards.
Carry-forwards are worked out on a five-year rolling basis but any unused amount after five years will expire. These carry-forwards apply only to concessional contributions into super and not non-concessional contributions as these have different caps.
From this year on any unused 2020 concessional contribution cap will be irretrievably lost – so it's time now to think very seriously about this!
SPOUSE SUPER CONTRIBUTIONS
You are able to make super contributions on your spouse’s (married or de facto) behalf if you meet the eligibility criteria and your super fund agrees.This is what is called contribution splitting.
Doing so also reports to your spouse’s retirement savings which in turn may put you in a position to pay less tax if your spouse has low income.
For spouses with income of $37,000 per year or less you may be entitled to a tax offset of up to $540 on your super contributions which you make for them that total up to $3,000.
For incomes above $37,000 p.a. the offset decreases gradually and drops to zero at $40,000 p.a. and up.
ADDITIONAL TAX ON SUPER CONTRIBUTIONS BY HIGH INCOME EARNERS
The income threshold at which the additional 15% (‘Division 293’) tax is payable on super $250,000 p.a. Where you are required to pay this additional tax, making super contributions within the cap is still a tax effective strategy.
With super contributions taxed at a maximum of 30% and investment earnings in super taxed at a maximum of 15%, both these tax points are more favourable when compared to the highest marginal tax rate of 47% (including the Medicare levy).
GOVERNMENT CO-CONTRIBUTION TO YOUR SUPER
If you are a low income earner and report that which you get from work or a business as at least 10% of your total income and also make a “non-concessional contribution” to super you may be eligible for a Government top up of up to $500.
In 2025 the max co-contribution is for you to put in $1,000 and earn up to $45,400. Also you will receive a lesser amount if you put in less than $1,000 and/or earn between $45,400 and $60,400.
PREPAY EXPENSES AND INTEREST
Expenses relating to investment activities can be prepaid before 30 June 2025. You can prepay up to 12 months of interest before 30 June on a loan for a property or share investment and claim a tax deduction this financial year. Also, other expenses in relation to your investments can be prepaid before 30 June, including rental property repairs, memberships, subscriptions, and journals.
OWNERSHIP OF INVESTMENTS
A longer-term tax planning strategy can be reviewing the ownership of your investments. Any change of ownership needs to be carefully planned due to capital gains tax and stamp duty implications. Please seek advice from your Accountant prior to making any changes.
Investments may be owned by a Family Trust, which has the key advantage of providing flexibility in distributing income on an annual basis and an ability for up to $416 per year to be distributed to children or grandchildren tax-free.
PROPERTY DEPRECIATION REPORT
If you have an investment property, a Property Depreciation Report (prepared by a Quantity Surveyor) will allow you to claim depreciation and capital works deductions on capital items within the property and on the property itself.
The cost of this report is generally recouped several times over by the tax savings in the first year of property ownership.
MOTOR VEHICLE LOGBOOK
Make sure that you have maintained a true and proper Motor Vehicle Logbook for a minimum of 12 weeks. The 12-week period must commence on or before 30 June 2025. You need to record your odometer reading as at 30 June 2025 and retain all receipts/invoices for motor vehicle expenditure. A prepared logbook can normally be utilized for a 5-year period.
Another option (no logbook required) is to just claim a maximum of 5,000 business kilometres (on a reasonable estimate) using the cents per km method.
SACRIFICE YOUR SALARY TO SUPER
If your annual income is $45,000 or more, salary sacrifice can be a great way to boost your superannuation and pay less tax. By putting pre-tax salary into super rather than having it taxed as normal income at your marginal rate you may save tax. This can be especially beneficial for employees nearing their retirement age.
INSURANCE PREMIUMS
Your ability to earn an income is probably your biggest financial asset. Income Protection Insurance is there to cover you - typically up to 75% of your salary - if you’re unable to work because of illness or an accident. Plus, the premiums are usually tax-deductible, which is a smart move financially. It’s not just about protecting yourself, either; you’re safeguarding your family’s standard of living if you can’t work for a while. Honestly, it’s a small expense for a whole lot of security.
And here’s a practical tip: just like you might pre-pay interest on a rental property, you can pre-pay your income protection premiums for up to 12 months to increase your deductions. It’s a solid strategy for anyone serious about managing risk and tax.
WORK RELATED EXPENSES
Don’t forget to keep any receipts for work-related expenses such as uniforms, training courses and learning materials, as these may be tax-deductible.
REALISE CAPITAL LOSSES
Tax applies to any capital gains you make. If you’ve got underperforming investments, it’s worth considering selling them before 30 June 2025. That way, you can lock in a capital loss and potentially reduce or even eliminate your capital gains tax liability. Any unused capital losses aren’t wasted - you can carry them forward to offset future capital gains.
DEFER INVESTMENT INCOME & CAPITAL GAINS
Where possible, consider arranging for investment income (such as interest from term deposits) and setting the contract date for selling capital gains assets to fall after 30 June 2025.
Please note: typically, the contract date - not the settlement date - is the relevant date when determining the timing of a sale or purchase.
Book a tax planning session with Future Accounting today and let our expert team tailor these strategies to your situation, so you can:
Legally reduce personal tax Australia 2025
Maximise deductions you didn’t know you could claim
Build a stronger financial future with smart planning
Schedule Your Consultation Now! Secure your tax savings before the deadline.
Disclaimer
This article does not constitute financial advice and is for general information only. It does not take into account any individual’s personal objectives, situation or needs, and is not intended as professional advice. Any similarity to an individual’s personal circumstances and the examples provided in this article is purely coincidental. Any person acting upon such information without receiving specific advice, does so entirely at their own risk.
Authorisation under an Australian Financial Services Licence (AFSL) is not required in the provision of this article and the author plus Future Accounting Group Pty Ltd is not acting in its capacity as an Australian Financial Services Licence holder
Liability limited by a scheme approved under professional standards legislation.
