Legal ways to reduce personal tax compared
Common tax-saving options for Australian individuals compared by how they work, who they suit and what to watch.
This table compares types of strategy, not products or providers. Each one is legal when the rules are followed, but none suits everyone: the benefit depends on your marginal rate, cash flow, super balance and whether you will need the money soon. The saving from a deduction is roughly the deduction multiplied by your marginal rate (including the 2% Medicare levy), so the same claim is worth more to a higher earner. Figures quoted are for the income year stated; check them on the ATO website.
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| Strategy | How it reduces tax | Usually suits | Watch out for |
|---|---|---|---|
| Salary sacrifice into super | Pre-tax salary taxed at 15% in the fund instead of your marginal rate | Employees on a 32% or higher marginal rate who can lock money away | Concessional cap ($32,500 in 2026–27) and Division 293 above $250,000 |
| Personal deductible super contribution | Contribute after-tax money, then claim a deduction after a notice of intent | People whose employer offers no salary sacrifice, or with irregular income | Notice must be acknowledged before lodging or rolling over; counts toward the cap |
| Carry-forward concessional cap | Use unused cap from up to five earlier years in one higher-income year | Total super balance under $500,000 with a bonus, capital gain or career break | Each unused amount expires after five years; in 2026–27 the oldest usable year is 2021–22 |
| Spouse contribution | Contribute to a low-income spouse's super and claim an offset of up to $540 | Couples where one partner earns under $40,000 | Offset only, not a deduction; spouse income test applies |
| Work-from-home fixed rate | 70c per hour worked from home (2024–25 and 2025–26) as a deduction | Employees who regularly work from home and keep an hours record | Needs a record of actual hours for the whole year; no separate phone or internet claim |
| Work-related deductions | Deduct expenses you paid that directly relate to earning your income | Employees with tools, uniforms, training or travel costs | Must have records and remove private use; reimbursed costs cannot be claimed |
| Holding assets 12 months for the CGT discount | Only 50% of the capital gain is taxed for individuals after 12 months | Investors selling shares, ETFs, crypto or an investment property | Not available to foreign residents for most gains; losses are applied before the discount; from 1 July 2027 replaced by indexation for most assets except new homes |
| Realising capital losses | Losses offset capital gains in the same or a later year | Investors with a gain and a loss-making holding | Selling and immediately rebuying for the tax result can be a wash sale |
| Negative gearing | Net rental or investment loss is deducted against other income | Long-term investors who can fund the shortfall | You still lose money each year; from 2027–28 losses on established homes bought after 12 May 2026 cannot offset other income |
| Private hospital cover | Avoids the Medicare levy surcharge of 1%–1.5% above the income threshold | Singles over $105,000 or families over $210,000 (2026–27) without cover | Compare premium cost with the surcharge; the surcharge applies to the whole income |
Rates and thresholds in this table are as published for the stated years and may change. Check the ATO's pages on super contribution caps, working from home, capital gains and the Medicare levy surcharge at ato.gov.au. A strategy that saves tax can still be wrong for you if it locks away money you need or increases your overall loss. This is general information, not personal tax or financial advice; for advice on your situation see a registered tax agent (tpb.gov.au) or a licensed financial adviser (check the register via moneysmart.gov.au).