Strategy 1 — Maximise Work-Related Deductions
The ATO allows deductions for expenses incurred in earning your income. The most commonly missed deductions include:
- Work from home — 67c/hour method for 2025-26 (record hours worked at home)
- Vehicle expenses — logbook method or 88c/km up to 5,000km for work travel
- Professional development — courses, conferences, subscriptions directly related to your current role
- Tools and equipment — immediately deductible under $300, depreciated above
- Professional memberships — union fees, professional association fees
- Phone and internet — work-use proportion of bills
Strategy 2 — Salary Sacrifice Into Superannuation
Salary sacrificing into super is one of the most tax-effective strategies available to Australian employees. Contributions are taxed at 15% inside super instead of your marginal rate (up to 45%). The concessional (before-tax) contributions cap for 2025-26 is $30,000 including employer SG contributions. For a person earning $120,000 (37% marginal rate), salary sacrificing $10,000 into super saves approximately $2,200 in income tax.
| Income | Marginal Rate | $10k Salary Sacrifice Saving |
|---|---|---|
| $50,000 | 19% | $400 |
| $80,000 | 32.5% | $1,750 |
| $120,000 | 37% | $2,200 |
| $180,000+ | 45% | $3,000 |
Strategy 3 — Negative Gearing Investment Properties
If your investment property generates a net loss (rental income minus expenses including interest), that loss can be offset against your other income, reducing your tax bill. On a $700,000 investment loan at 6.5%, with $36,000 interest + $8,000 expenses and $28,000 rental income, your net loss of $16,000 reduces taxable income by $16,000. At a 37% marginal rate, this saves $5,920 in tax. Important: negative gearing only makes financial sense if capital growth exceeds the after-tax loss over the investment period.
Strategy 4 — Timing of Income and Deductions
Timing can significantly affect your tax bill. If you expect lower income next year (redundancy, parental leave, retirement), deferring income recognition to that year saves tax. Similarly, bringing forward deductible expenses into the current year when your income is higher maximises the deduction value. For example, prepaying interest on an investment loan before 30 June locks in the deduction in the current year.
Frequently Asked Questions
What tax deductions can I claim without receipts in Australia?
For claims up to $300 total for work-related expenses, the ATO allows claims without receipts. Above $300, you need substantiation. The work from home hourly rate method requires a diary record of hours, not receipts for specific items.
Can I claim my home office if I work from home in Australia?
Yes. For 2025-26 you can claim 67c per hour worked at home under the fixed rate method, or claim actual expenses under the actual cost method. You must keep a record of hours worked from home — a logbook, diary or timesheet.
How much tax do I save by salary sacrificing $5,000 into super?
At a 37% marginal rate, salary sacrificing $5,000 saves approximately $1,100 in income tax (the difference between your 37% marginal rate and the 15% super tax). Use our income tax calculator to model your specific figures.