When advising on LEGAL tax minimization strategies for Australian taxpayers — individuals, sole traders, and small business owners.
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Tax year period (2025–26)
1 July – 30 JuneIncome Tax Assessment Act 1997 (ITAA 1997)
Individual return filing deadline (self-lodgers)
31 OctoberIncome Tax Assessment Act 1997 (ITAA 1997); Taxation Administration Act 1953
Individual top marginal rate (excluding Medicare levy)
45%Income Tax Rates Act 1986
Medicare levy rate
2%Medicare Levy Act 1986
Individual effective top rate (including Medicare levy)
47%Income Tax Rates Act 1986; Medicare Levy Act 1986
Company tax rate — base rate entity (aggregated turnover < $50m, ≤80% passive income)
25%Income Tax Rates Act 1986; Income Tax Assessment Act 1997 (ITAA 1997)
Company tax rate — other (general rate)
30%Income Tax Rates Act 1986
Base rate entity aggregated turnover threshold
< $50,000,000Income Tax Rates Act 1986; ITAA 1997
Base rate entity passive income threshold
≤80% passive incomeIncome Tax Rates Act 1986; ITAA 1997
CGT discount — individuals, assets held >12 months
50%Income Tax Assessment Act 1997 (ITAA 1997), Division 115
Standard GST rate
10%A New Tax System (Goods and Services Tax) Act 1999 (GST Act)
Superannuation guarantee rate (2025–26)
12%Superannuation Guarantee (Administration) Act 1992 (SGAA)
Individual income tax bracket — $0 to $18,200
0%Income Tax Rates Act 1986
Individual income tax bracket — $18,201 to $45,000
16%Income Tax Rates Act 1986
Individual income tax bracket — $45,001 to $135,000
30%Income Tax Rates Act 1986
Individual income tax bracket — $135,001 to $190,000
37%Income Tax Rates Act 1986
Individual income tax bracket — $190,001+
45%Income Tax Rates Act 1986
Cumulative tax at top of $18,201–$45,000 bracket
$4,288Income Tax Rates Act 1986
Cumulative tax at top of $45,001–$135,000 bracket
$31,288Income Tax Rates Act 1986
Cumulative tax at top of $135,001–$190,000 bracket
$51,638Income Tax Rates Act 1986
Tax-free threshold (individual)
$18,200Income Tax Rates Act 1986
Medicare levy surcharge rate range
1%–1.5%Medicare Levy Act 1986; A New Tax System (Medicare Levy Surcharge — Fringe Benefits) Act 1999
Medicare levy surcharge income threshold — single (no private hospital cover)
$101,000Medicare Levy Act 1986
Medicare levy surcharge income threshold — family (no private hospital cover)
$202,000Medicare Levy Act 1986
Non-commercial loss rules — legislation reference
s 35-10 ITAA 1997s 35-10, Income Tax Assessment Act 1997 (ITAA 1997)
Division 7A — loans/payments to shareholders treated as unfranked dividends
Loans and payments to shareholders/associates treated as unfranked dividends unless complying loan agreements in placeITAA 1936, ss 109C–109T
Minor beneficiary penalty tax rate — unearned income above $416 (Division 6AA)
Effectively 66% on amounts above $416Income Tax Assessment Act 1936 (ITAA 1936), Division 6AA
Minor beneficiary unearned income — low-rate threshold
$416Income Tax Assessment Act 1936 (ITAA 1936), Division 6AA
Spouse super contribution tax offset — maximum
$540 (18% of $3,000)s 290-230, Income Tax Assessment Act 1997 (ITAA 1997)
Spouse super contribution eligible amount
$3,000s 290-230, Income Tax Assessment Act 1997 (ITAA 1997)
Spouse super contribution offset — spouse income limit
< $40,000s 290-230, Income Tax Assessment Act 1997 (ITAA 1997)
Concessional contributions — percentage rollable to spouse account
Up to 85% of prior year concessional contributionsSuperannuation Industry (Supervision) Regulations 1994
Home office running expenses — fixed rate (from 1 July 2022)
67c/hours 8-1, Income Tax Assessment Act 1997 (ITAA 1997)
Self-education expenses — non-deductible amount for employees
First $250 non-deductibles 8-1, Income Tax Assessment Act 1997 (ITAA 1997)
Tools and equipment — immediate deduction threshold
≤$300s 8-1, Income Tax Assessment Act 1997 (ITAA 1997)
Tax agent fees — legislation
Deductible — cost of managing tax affairs including prior-year amendmentss 25-5, Income Tax Assessment Act 1997 (ITAA 1997)
Prepaid expenses — maximum prepayment period for immediate deduction (non-business individuals)
≤12 monthss 82KZM, Income Tax Assessment Act 1936 (ITAA 1936)
Instant asset write-off — eligible small business aggregated turnover threshold
< $10,000,000Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Act 2025
Instant asset write-off — maximum cost per asset
< $20,000Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Act 2025
Instant asset write-off — deadline (first use or installed ready for use)
By 30 June 2026Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Act 2025
Small business simplified depreciation pool — first year rate (assets ≥$20,000)
15%Income Tax Assessment Act 1997 (ITAA 1997), Subdivision 328-D
Small business simplified depreciation pool — ongoing declining balance rate
30%Income Tax Assessment Act 1997 (ITAA 1997), Subdivision 328-D
Small business pool — write-off threshold for pool balance at 30 June 2026
< $20,000Income Tax Assessment Act 1997 (ITAA 1997), Subdivision 328-D
Diminishing value depreciation formula
Base value × (days held / 365) × (200% / effective life)Income Tax Assessment Act 1997 (ITAA 1997), s 40-70
Prime cost (straight-line) depreciation formula
Cost × (days held / 365) × (100% / effective life)Income Tax Assessment Act 1997 (ITAA 1997), s 40-75
ATO effective life schedule ruling reference
TR 2024/3TR 2024/3 (ATO Tax Ruling)
Motor vehicle depreciation cost limit (2025–26)
$69,674Income Tax Assessment Act 1997 (ITAA 1997), s 40-230
Logbook minimum continuous period for motor vehicle substantiation
12 weeks (continuous)Income Tax Assessment Act 1997 (ITAA 1997), s 900-155
Logbook validity period
5 yearsIncome Tax Assessment Act 1997 (ITAA 1997), s 900-155
Cents-per-kilometre rate (2025–26)
85c/kmIncome Tax Assessment Act 1997 (ITAA 1997); ATO-determined rate
Cents-per-kilometre method — maximum claimable kilometres
5,000 kmIncome Tax Assessment Act 1997 (ITAA 1997), s 28-25
Cents-per-kilometre method — maximum deduction
$4,250Income Tax Assessment Act 1997 (ITAA 1997), s 28-25
Individual/sole trader tax losses — carry forward period
Indefinitelys 36-15, Income Tax Assessment Act 1997 (ITAA 1997)
Non-commercial loss test 1 — assessable income from activity
≥$20,000Income Tax Assessment Act 1997 (ITAA 1997), Division 35
Non-commercial loss test 2 — profit in prior years
Profit in 3 of last 5 years (including current year)Income Tax Assessment Act 1997 (ITAA 1997), Division 35
Non-commercial loss test 3 — real property used
≥$500,000Income Tax Assessment Act 1997 (ITAA 1997), Division 35
Non-commercial loss test 4 — other assets used
≥$100,000Income Tax Assessment Act 1997 (ITAA 1997), Division 35
Non-commercial loss quarantine — adjusted taxable income threshold (no test met)
> $250,000Income Tax Assessment Act 1997 (ITAA 1997), Division 35
Company loss continuity of ownership test — minimum ownership threshold
> 50% voting, dividend, and capital rightss 165-12, Income Tax Assessment Act 1997 (ITAA 1997)
Company same business test broadened to similar business test — year
2015s 165-13, Income Tax Assessment Act 1997 (ITAA 1997)
Loss carry-back — eligible company aggregated turnover threshold
< $5,000,000,000Income Tax Assessment Act 1997 (ITAA 1997), Subdivisions 160-B and 160-C
Concessional contributions cap (2025–26)
$30,000s 291-20, Income Tax Assessment Act 1997 (ITAA 1997)
Carry-forward unused concessional cap — total super balance threshold
< $500,000s 291-170, Income Tax Assessment Act 1997 (ITAA 1997)
Small business CGT — 15-year exemption
15-year exemption (full exemption)Income Tax Assessment Act 1997 (ITAA 1997), Division 152
Small business CGT — 50% active asset reduction
50% reductionIncome Tax Assessment Act 1997 (ITAA 1997), Division 152
Small business CGT — retirement exemption lifetime cap
$500,000Income Tax Assessment Act 1997 (ITAA 1997), Division 152
Small business CGT concessions — maximum net asset threshold
< $6,000,000Income Tax Assessment Act 1997 (ITAA 1997), Division 152
Small business CGT concessions — aggregated turnover threshold
< $2,000,000Income Tax Assessment Act 1997 (ITAA 1997), Division 152
Mandatory GST registration threshold — standard entities
≥$75,000 current or projected GST turnoverA New Tax System (Goods and Services Tax) Act 1999 (GST Act), s 23-5
Mandatory GST registration threshold — non-profits
≥$150,000A New Tax System (Goods and Services Tax) Act 1999 (GST Act), s 23-15
Cash basis GST reporting — aggregated turnover eligibility threshold
< $10,000,000A New Tax System (Goods and Services Tax) Act 1999 (GST Act)
BAS reporting — quarterly threshold
Turnover < $20,000,000A New Tax System (Goods and Services Tax) Act 1999 (GST Act); Taxation Administration Act 1953
BAS reporting — annual election threshold
Turnover < $75,000A New Tax System (Goods and Services Tax) Act 1999 (GST Act); Taxation Administration Act 1953
Concessional contributions tax rate (within fund)
15%s 291-20, Income Tax Assessment Act 1997 (ITAA 1997)
Carry-forward unused concessional cap — number of prior years available
Up to 5 prior yearss 291-170, Income Tax Assessment Act 1997 (ITAA 1997)
Non-concessional contributions cap (annual)
$120,000s 292-85, Income Tax Assessment Act 1997 (ITAA 1997)
Non-concessional contributions cap — bring-forward rule (3 years)
$360,000 over 3 yearss 292-85, Income Tax Assessment Act 1997 (ITAA 1997)
Non-concessional contributions — earnings tax rate in super
Maximum 15%Income Tax Assessment Act 1997 (ITAA 1997)
Government co-contribution — maximum amount
$500s 12A, Superannuation (Government Co-contribution for Low Income Earners) Act 2003
Government co-contribution — income eligibility threshold
< $45,400s 12A, Superannuation (Government Co-contribution for Low Income Earners) Act 2003
Division 293 tax — additional contributions tax rate
15%Income Tax Assessment Act 1997 (ITAA 1997), Division 293
Division 293 tax — income + concessional contributions threshold
> $250,000Income Tax Assessment Act 1997 (ITAA 1997), Division 293
Super pension phase — transfer balance cap
$1,900,000 (indexed)Income Tax Assessment Act 1997 (ITAA 1997), Division 294
Transition to retirement (TTR) — earnings tax rate
15% (not tax-free)Income Tax Assessment Act 1997 (ITAA 1997)
Part IVA — scheme shortfall penalty rate
50% shortfallIncome Tax Assessment Act 1936 (ITAA 1936), Part IVA (ss 177A–177J); Taxation Administration Act 1953
Part IVA — penalty rate with reasonably arguable position
25% shortfallIncome Tax Assessment Act 1936 (ITAA 1936), Part IVA (ss 177A–177J); Taxation Administration Act 1953
Trust distribution resolution — must be made before
30 June (end of income year)Income Tax Assessment Act 1936 (ITAA 1936), s 100A; trust deed requirements
Super contributions processing deadline — planning guidance
By approximately 25 June (to ensure processing by 30 June)Income Tax Assessment Act 1997 (ITAA 1997), s 291-20
Quick Reference
| Field | Value |
|---|---|
| Country | Australia (Commonwealth of Australia) |
| Currency | AUD |
| Tax year | 1 July – 30 June (2025–26) |
| Primary legislation | Income Tax Assessment Act 1997 (ITAA 1997); Income Tax Assessment Act 1936 (ITAA 1936) |
| Anti-avoidance | Part IVA, ITAA 1936 (General Anti-Avoidance Rule) |
| Tax authority | Australian Taxation Office (ATO) |
| Filing deadline | 31 October (self-lodgers); agent-lodged extensions vary |
| Individual top rate | 45% + 2% Medicare levy = 47% effective |
| Company rate (base rate entity) | 25% (aggregated turnover < $50m, ≤80% passive income) |
| Company rate (other) | 30% |
| CGT discount (individuals) | 50% on assets held >12 months |
| GST rate | 10% |
| Superannuation guarantee | 12% (2025–26) |
Individual Tax Brackets (2025–26)
| Taxable Income (AUD) | Rate | Cumulative Tax |
|---|---|---|
| 0 – 18,200 | 0% | $0 |
| 18,201 – 45,000 | 16% | $4,288 |
| 45,001 – 135,000 | 30% | $31,288 |
| 135,001 – 190,000 | 37% | $51,638 |
| 190,001+ | 45% | — |
Plus 2% Medicare levy on total taxable income. Medicare levy surcharge (1%–1.5%) applies if no private hospital cover and income exceeds $101,000 (single).
Discretionary (family) trusts allow income distribution to adult family members in lower brackets. The trustee resolution must be made before 30 June. Key constraints:
Deductions Most People Miss
| Deduction | Legislation | Notes |
|---|---|---|
| Home office running expenses | s 8-1 ITAA 1997 | Fixed rate 67c/hour (revised method from 1 July 2022) or actual cost. Must keep contemporaneous records (timesheets, diary) |
| Self-education expenses | s 8-1 | Must have sufficient connection to current employment/business. First $250 non-deductible for employees (not self-employed) |
| Phone and internet | s 8-1 | Apportion business use %. ATO accepts a representative 4-week diary |
| Income protection insurance | s 8-1 | Premiums for policies replacing lost income are deductible |
| Professional memberships and subscriptions | s 8-1 | CPA Australia, CA ANZ, industry bodies |
| Tax agent fees | s 25-5 | Cost of managing tax affairs including prior-year amendments |
| Union fees | s 8-1 | Full deduction |
| Tools and equipment (≤$300) | s 8-1 | Immediately deductible if cost ≤$300 and used for income |
| Travel between workplaces | s 8-1 | Deductible (but NOT home-to-work commuting) |
| Donations to DGRs | Div 30 | Deductible gifts to Deductible Gift Recipients |
| Prepaid expenses ≤12 months | s 82KZM ITAA 1936 | Non-business individuals can prepay deductible expenses before 30 June for immediate deduction |
General Depreciation Methods
| Method | How It Works |
|---|---|
| Diminishing value | Base value × (days held / 365) × (200% / effective life) |
| Prime cost (straight-line) | Cost × (days held / 365) × (100% / effective life) |
Timing Strategies
| Strategy | Detail |
|---|---|
| Defer income to next FY | Delay invoicing until after 30 June if cash-basis taxpayer. For accrual-basis, delay delivery/completion |
| Accelerate deductions before 30 June | Prepay up to 12 months of deductible expenses (rent, insurance, subscriptions) — s 82KZM ITAA 1936 |
| Bring forward asset purchases | Use instant asset write-off before 30 June deadline. Asset must be first used or installed ready for use |
| Concessional super contribution | Maximise contributions before 30 June — $30,000 cap (2025–26). Carry-forward unused cap available if total super balance <$500,000 |
| Capital gains harvest | Realise capital losses before 30 June to offset gains. Wash sale rules: ATO will scrutinise buybacks of substantially similar assets |
| Defer capital gains | Hold assets >12 months to access 50% CGT discount (individuals and trusts) |
| Small business CGT concessions | Div 152: 15-year exemption, 50% active asset reduction, retirement exemption ($500k lifetime cap), rollover. Net assets <$6m or aggregated turnover <$2m |
GST Optimization
| Topic | Detail |
|---|---|
| Registration threshold | Mandatory if current or projected GST turnover ≥$75,000 ($150,000 for non-profits). Voluntary registration below threshold to claim input tax credits |
| Cash vs accrual reporting | Cash basis available if aggregated turnover <$10m. Defers GST on income until payment received |
| Input tax credits | Claim GST on business purchases. Apportionment required for mixed (business/private) use |
| GST-free supplies | Exports, health, education, some food — no GST charged, but input credits still claimable. Valuable for exporters |
| Going concern | Sale of a business as a going concern is GST-free (Div 38) — avoids cash flow impact on business transfers |
| Margin scheme (property) | GST calculated on margin (sale price minus purchase price) rather than full sale price. Buyer cannot claim input credits |
| Tax periods | Monthly, quarterly, or annual BAS. Quarterly if turnover <$20m. Annual election available if turnover <$75,000 |
Superannuation (Retirement)
| Strategy | Detail | Legislation |
|---|---|---|
| Concessional contributions | Cap $30,000/year (2025–26). Tax-deductible for self-employed. Taxed at 15% in the fund | s 291-20 ITAA 1997 |
| Carry-forward unused cap | Unused concessional cap from up to 5 prior years if total super balance <$500,000 at prior 30 June | s 291-170 |
| Non-concessional contributions | Cap $120,000/year (or $360,000 under bring-forward rule over 3 years). Not deductible, but earnings taxed at max 15% in super | s 292-85 |
| Salary sacrifice | Pre-tax super contributions reduce assessable income. Counted towards concessional cap | |
| Spouse contribution offset | Contribute to low-income spouse's super for tax offset up to $540 | s 290-230 |
| Government co-contribution | Contribute to low-income earner's super; government matches up to $500 (income <$45,400) | s 12A SGAA |
| Division 293 tax | Additional 15% contributions tax on individuals with income + concessional contributions >$250,000 | Div 293 |
Investment & Retirement
| Strategy | Detail |
|---|---|
| CGT 50% discount | Individuals and trusts — hold assets >12 months for 50% discount on net capital gain |
| Negative gearing | Investment property/share portfolio borrowing costs exceed income → net loss offsets other income. No cap in Australia |
| Franking credits | Australian company dividends carry franking credits. Excess credits refundable for individuals and super funds |
| Super in pension phase | Earnings on assets supporting income streams in pension phase are tax-free (up to transfer balance cap of $1.9m, indexed) |
| Transition to retirement (TTR) | Access super as income stream from preservation age while still working. Earnings in TTR taxed at 15% (not tax-free) |
ATO Scrutiny Triggers
| Trigger | Risk |
|---|---|
| Trust distributions to low-income beneficiaries with reimbursement agreements | s 100A — voided, trustee taxed at top rate |
| Division 7A non-complying loans | Deemed unfranked dividend |
| Non-commercial losses claimed without meeting 4 tests | Loss quarantined, amended assessment |
| Large work-related deductions vs income | Risk of audit |
| Wash sales around 30 June | CGT loss disallowed |
| Artificial income splitting via interposed entities | Part IVA application |
| Personal services income (PSI) through company or trust | PSI rules attribute income back to individual (Div 86–87) |
| Excessive salary sacrifice to reduce Division 293 exposure | ATO scrutiny, potential SG shortfall |
| Contractor vs employee misclassification | Super guarantee charge, penalties |
| Cryptocurrency — unreported disposal events | ATO data-matching from exchanges |
Annual Tax Planning Calendar
| When | Action |
|---|---|
| July | New FY starts. Review prior year's unused concessional super cap. Lodge prior-year BAS |
| August–September | Obtain prior-year tax assessment. Review loss carry-forward position |
| October | Self-lodger deadline (31 Oct). Review investment portfolio for CGT planning |
| November–December | Mid-year tax review. Adjust PAYG instalments if income changed materially |
| January | Superannuation guarantee due (Q2). Review Division 7A loan repayments |
| February–March | Lodge Q2 BAS. Model year-end tax position. Begin pre-30 June planning |
| April–May | Execute prepayment strategies. Make concessional super contributions. Review asset purchases for instant write-off |
| June (before 30 June) | Critical month. Finalise trust distribution resolutions. Make super contributions (allow processing time — contribute by ~25 June). Prepay expenses. Realise capital losses. Lodge PAYG variation if needed |
Before: Sole trader, $180,000 net profit. Tax: ~$51,067 + $3,600 Medicare = $54,667.
After: Pty Ltd, pays $80,000 salary + $12,000 super. Retains $88,000 in company at 25% = $22,000 company tax. Personal tax on $80,000 salary: ~$16,788 + $1,600 Medicare = $18,388. Total tax: $40,388. Saving: ~$14,279.
Sole trader, $120,000 profit. Claims $30,000 concessional super contribution (deductible). Taxable income drops to $90,000. Tax saving at 30% marginal: $9,000 less 15% super tax ($4,500) = net saving $4,500 + compounding in super environment.
Small business buys 3 laptops at $2,500 each and a vehicle at $18,000. Total: $25,500 immediately deductible (each asset <$20,000). At 30% marginal rate = $7,650 cash saving in the year of purchase vs multi-year depreciation.
Employee earns $120,000. Investment property: $25,000 rent less $35,000 expenses (interest, rates, depreciation) = $10,000 net loss. Taxable income: $110,000. Tax saving at 30% marginal: $3,000 cash refund via PAYG variation.
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