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The High-Income Earners' Guide to Tax Planning in Australia

You can save tens of thousands of dollars year and better allocate your resources to the development of your company and the things that are important to you when you continue to be compliant and consistent with your tax planning strategies.

The ATO defines "Tax Planning" as the ability of an Australian taxpayer to organise their financial affairs in a way that minimises their tax liability. However, people must make sure to conduct their affairs lawfully and within bounds when doing so. Tax Avoidance and Tax Evasion are two illegal tax planning strategies that can carry severe consequences, such as fines and jail time.

The top 10 tax planning strategies for high income earners are outlined here, along with tips on enhancing your tax planning strategy.

Tax Planning Strategy No. 1:

Using Your SMSF Or Superannuation Fund

Contributing to your super fund gives you the chance to increase your retirement savings while also potentially lowering your tax liability. Individuals are allowed to make up to $25k in personal contributions each year to the super fund of their choice, including payments made on behalf of their employer or employers.

However, exceeding the $25k maximum on deductible superannuation contributions will subject the taxpayer to an effective tax rate of 49%.

SMSF Superannuation Tax Planning
Retirement Tax Planning

Tax Planning Technique No. 2:

Avoid the Medicare Levy Surcharge

The Medicare Levy, which is computed at 2% of an individual's taxable income, is paid by Australians earning more than $27,000. High earners who do not have private health insurance or hospital coverage (singles making $90k+ and couples making $180k+ combined) must also pay the Medicare Levy Surcharge. The Medicare Levy Surcharge, which is assessed at an additional 1–1.5% of a person's taxable income, incentivizes those without private health insurance to think about getting it and utilising the private health system.

Tax Planning Strategy No. 3:

Investing in Real Estate Through Negative Gearing

Negative gearing, according to the Treasury, is "a commonly used term used to describe a scenario where expenses related to an asset (including interest expenses) are higher than the income generated from the asset. Negative gearing is not limited to real estate investments.

Negatively geared taxpayers can offset their losses against other income, such as their salary and wages. Many people with high incomes may also own investment properties that are negatively geared, which means that the tax benefits of renting out the property outweigh the rental income.

Tax Planning Strategy No. 4:

Tax Deductible Donations

Make recurring donations to charities as part of tax planning strategy 4.

Giving back is more crucial than ever in light of the disastrous effects the COVID-19 outbreak had on the neighbourhood. People who are committed to supporting their community or certain causes can think about donating to an Australian Deductible Gift Recipient as a tax-deductible gift (DGR).

You might also want to look into your company's Foundation as a practical means of becoming involved in charitable work! Remember that only contributions made to DGRs will be eligible for a tax deduction.

Tax Planning Technique No. 5:

Advancing Your Education

Tax deductions may be claimed for education that will improve a taxpayer's abilities in their present employment role. The following teaching resources are available for claim:

  • Further research

  • improvement of one's career

  • Training

  • Self-education

You can also enlist our member services for executive coaching to create a detailed plan on how to optimise your work performance. Please contact us to know more about executive coaching services.

Continuing Professional Education Tax Deduction
Continuing Professional Education

Tax Planning Strategy No. 6:

Create an Inspiring Home Office

A large number of taxpayers adopted a work-from-home schedule as a result of the COVID-19 pandemic. However, several employers are allowing new work-from-home schedules for their personnel months after the lockdown has ended.

Home-based workers are qualified to deduct costs related to their area of work that they incur. This includes people who worked from home during COVID-19 lockdowns.

What costs may you deduct while working from home?

  • Electricity

  • Technology

  • Equipment

  • Furniture

  • Phone

  • Internet

What costs cannot you deduct when working from home?

  • items that your employer provided (such as a monitor, laptop, phone, etc.,)

  • Items for everyday usage that employers may supply (coffee, tea, milk)

  • Education of your children (including setting them up for online learning, teaching them at home, buying them equipment such as technology, equipment and furniture)

Tax Planning Strategy No.7:

Income Protection Insurance

In uncertain times, income protection insurance safeguards your finances, your family, and you. In essence, it is a good strategy to safeguard your present income in the event that a sickness or disability prevents you from working.

Income Protection Insurance pays monthly instalments equal to up to 75% of a person's gross annual income (which includes superannuation repayments) to support living expenses until you are prepared to return to work.

For a free consultation to determine if Income Protection Insurance is the best choice for you and your family, get in touch with our Private Wealth team.

Tax Planning Strategy No. 8:

File Your Tax Return Earlier

You can file your tax return as soon as feasible following the end of the fiscal year by keeping all of your records up to date (30 June). By filing your tax return early, you can avoid late fees and penalties and get your money back sooner.

Tax Planning Strategy No. 9:

Use Technology Maintain Your Documents and Records

Taxpayers will be required to present pertinent and pertinent paperwork to corroborate any claims they may have made throughout the course of the financial year in the case of an ATO assessment or audit.

It is essential that each taxpayer who has filed a claim has access to:

  • Statements for credit cards

  • Banking records

  • sales invoices

  • expense reports

  • Tax statements

  • Records pertaining to employees (only for employers and business owners)

The ATO requires logbooks and representative 28 day diary entries to log work-related usage vis a vis non-work related usage when claiming mixed use utilities and services. Please note that each type of deduction requires its own set of record keeping to be deemed adequate by the ATO.

Your tax adviser should be able to provide you with relevant workbooks that can save you thousands over the long run.

Tax Planning Strategy 10:

Get the best tax adviser you can get

Just like getting the best medical professional who understands your lifestyle and background is important to become healthier, high earners become wealthier by engaging only the best advisers who understand their industry and long term goals.

In order to make sure that you are employing strategies that will be advantageous to you in the long term, you must seek professional counsel. An professional will be able to outline all of the tax breaks you are eligible for while emphasising those that apply to your particular situation and business.

We've compiled the best advice on tax preparation for business owners and how to maximise wealth and reduce risk through tax planning as tools to assist you. Before starting your own Tax Planning journey, it's crucial to get counsel from a professional to ensure compliance with the law.

To discuss your tax planning strategy, contact us.


This page is just meant to serve as general information; it is not intended to be advise on any subject, and it should not be taken as such. The information in this page was created without taking into account any specific goals, needs, or financial circumstances of any individual. Therefore, before taking any action or seeking advice before making any financial decisions, you should examine whether the information is appropriate in light of these factors.

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