How to Pay Less Tax Legally in Australia

Claim Every Deduction You're Actually Entitled To

The single biggest reason small businesses overpay tax isn't a lack of clever strategy, it's simply missed deductions. Work-related expenses, home office costs, vehicle use, professional development, software subscriptions, and interest on business borrowing all reduce taxable income, but only if they're actually captured and substantiated.

This comes back to record-keeping. A deduction you can't prove with a proper receipt or tax invoice is a deduction the ATO can disallow. Good bookkeeping throughout the year, not a scramble at tax time, is what actually captures the full deduction you're entitled to.

Superannuation Contributions

Concessional super contributions, employer contributions plus any salary sacrifice or personal deductible contributions, are taxed at 15% inside the fund rather than at your marginal tax rate. For anyone on a marginal rate above 15%, that's a genuine saving, and it also reduces your taxable income in the year the contribution is made, up to the annual concessional cap.

• Salary sacrificing reduces your take-home pay slightly but boosts retirement savings at a lower tax rate
• Sole traders can make personal deductible contributions directly, without needing an employer arrangement
• Unused concessional cap from recent years can sometimes be carried forward if your total super balance is under the relevant threshold, worth checking with your accountant

Timing Income and Expenses Around Year End

Legitimate timing of genuine transactions is a normal, accepted part of tax planning. If you're planning a real business expense anyway, equipment, marketing, professional fees, bringing it forward to before 30 June can bring the deduction into the current year rather than the next. Similarly, if income can genuinely be invoiced or received either side of year end, the timing has a real effect on which year it's taxed in.

The key word throughout is genuine. Fabricating invoices, backdating transactions, or artificially deferring income you've actually already earned crosses from tax planning into tax avoidance, and the ATO does look for exactly this pattern around year end.

Business Structure

How your business is structured, sole trader, company, or trust, materially affects the tax rate applied to profit. A sole trader's profit is taxed at individual marginal rates, climbing to 45% at higher income. A company pays a flat rate, 25% or 30% depending on turnover, which can be an advantage once profit reaches a certain level, though getting money out of a company for personal use comes with its own rules, including Division 7A.

Restructuring purely to save tax, without considering the compliance cost, liability implications, and how you'll actually access the money, is a common mistake. It's worth a proper conversation with your accountant before making the change, not just chasing the headline tax rate.

The Instant Asset Write-Off

Eligible small businesses can claim an immediate deduction for the full cost of an eligible asset, rather than depreciating it over several years. This brings the tax benefit forward into the year of purchase, which is a genuine cash flow advantage if the purchase was something you needed anyway, a work vehicle, tools, computer equipment.

The threshold and eligibility rules change from year to year, so it's worth checking the current settings before assuming a purchase qualifies, rather than relying on last year's rules.

Where Bookkeeping Ends and Tax Advice Begins

As a Registered BAS Agent, we handle the record-keeping, BAS lodgement, and the groundwork that makes every one of these strategies possible, accurate books, properly captured deductions, and clean numbers for your accountant to work with. Structuring decisions and specific tax advice sit with your accountant or tax agent, and we work alongside them rather than in place of them.

Looking for a bookkeeper in Geelong? True Tally provides fixed-fee bookkeeping, BAS lodgement and payroll for small businesses across Geelong and the Surf Coast.