Tax Minimisation
Australia is a self reporting tax system; which means it is your responsibility to understand all the rules and report accurately. Different methods allow for different outcomes but they can be grouped as Reduction and Deferral. Both of which are important to understand and utilise where appropriate.
Tax Evasion - Illegal actions like not reporting income, or falsifying deductions.
Tax Avoidance - Schemes that technically follow the law, but defeat the laws intent. Basically if you're doing something just for the purpose of reducing tax.
Tax Reduction TR - Methods which reduce the tax payable forever; e.g. Super Contribution, Death Benefit, Debt Recycling.
Tax Deferral TD - Delaying the full payment of tax so you can utilise the funds now for further investment; e.g. Corporate Beneficiary, Loss crystallisation, Depreciation
Effective tax reduction and deferral methods can reduce tax by up to 20%; worth around 2%pa with no additional risk. The downside is it does take some additional planning, and activity each year.
The first step to minimising tax is understanding how marginal tax rates work; and how different entities are taxed.
Individual Marginal Rates
Company Tax
Trust
Super
Tax Planning Strategies
TRConcessional Contributions - Maximise to the cap ($30k) for any cash you don't need until retirement
TRDebt Recycling - using excess cash to pay down homeloan before investing to make your home loan deductible
TDDepreciation Schedule - Get a depreciation schedule whenever you buy property done, and ensure capital improvement works get added to the depreciation schedule.
TRFamily Trust - Set up when you will have enough investment returns and income streaming available that it is worth it.
TDTRCorporate Beneficiary - set up corporate beneficiary with Family trust when you have enough non-discounted capital gains income
TRSMSF - You'll probably already have one by this point to reduce cost, but added benefit is you can choose capital appreciating assets which reduces tax as you move into pension phase without selling.
TRDeath Benefit - Sell assets and withdraw super and pension balance before death to avoid the tax.
TDCGT Reduction - Parcel apportionment to reduce CGT owning and track ETF Cost base adjustments
TRCGT Discount - Delaying asset sale until after 12 months of ownership if possible
TDCGT Losses - Sell loss position assets to offset gains in the same year.
TRDeductions - Keep receipt records for any work or investment related expenses.
Impact of structuring on tax
Standard $150k + Super
Avg Tax: 25.2%, Retained: $125.6k
Trust + Corp Ben
Avg Tax: 15.0%, Retained: $142.8k
Tax Structure Simulator
Generate a structured tax chart based on your income and structure preferences.
Each adult gets their own tax brackets. For example, with 3 adults: 0% tax applies to $54k (3 × $18k), 15% super applies to $90k (3 × $30k), and so on. The chart shows the combined effect across all adults.
Generated Tax Structure Chart
| Payer | Tax Rate | Bracket Cap $k | Income Range $k | Tax $k |
|---|
How to implement tax minimisation with SelfManaged
Track all income, deductions, and tax events in your portfolio. SelfManaged calculates tax implications and helps you optimise your tax position.
Monitor your tax position throughout the year and plan strategies to minimise your tax liability while maximising after-tax returns.
FAQ
Potentially 20-30% of your tax bill through proper strategies. The exact amount depends on your situation and the strategies implemented.
Basic strategies yes, but seek professional advice for complex situations. Tax laws are complex and change frequently.
At least annually, or when circumstances change significantly. Tax laws and your situation can change frequently.
Yes, when properly implemented within tax law. Avoid aggressive schemes and seek professional advice for complex strategies.