1. Individual Tax - Allowable Deductions Part 1
1.1. What are allowable deductions?
1.1.1. To claim an expense, it must:
1.1.1.1. Be Incurred (this means you have an obligation to pay. (invoice))
1.1.1.2. Have a direct connection to earning assessable income
1.1.1.3. Not be private or capital in nature
1.1.1.4. Not be specifically excluded by law
1.1.1.5. Be supported by written evidence
1.2. Expenses vs Capital
1.2.1. Expenses
1.2.1.1. Description: Used up during the (12month)
1.2.1.1.1. Tax Treatment: Claim in full when incurred
1.2.2. Capital
1.2.2.1. Description: Asset that exists beyond the year
1.2.2.1.1. Tax Treatment: Must depreciate over time
1.3. Common Non-Deductible items
1.3.1. Fine (speeding)
1.3.2. Private cost ( childcare, suits)
1.3.3. Travel to inspect residential rentals (unless owned by a company)
1.3.4. Cost of gaining new employment (job interveiw travel)
1.4. Substantiation Rules
1.4.1. Keep all records and receipts for 5 years, from the date of lodgement of tax return.
1.4.2. Use the ATO mydeductions app
1.4.3. CGT: records from 5 years from sale
1.4.4. No Receipts Required:
1.4.4.1. Small Expenses <$10 each
1.4.4.1.1. Total claim for small expenses $200 or less
1.4.4.1.2. Diary entry
1.4.4.2. $150 in laundry
1.4.4.3. Hard to get receipts
1.4.4.4. Total work expenses (including laundry) $300 or less
1.5. Work - Related Deductions (Common in Agribusiness)
1.5.1. Tools & Equipment
1.5.1.1. Example: Laptop, saddle, calculator
1.5.1.1.1. Rules: Cost > $300 = depreciate
1.5.2. Clothing
1.5.2.1. Examples: Hi - vis, Steel boots, Wide - Brim hat
1.5.2.1.1. Rules: Must protect from risk or be compulsory
1.5.3. Laundry
1.5.3.1. Examples: Uniform wash
1.5.3.1.1. Rules: $150 or $1 / wash - no receipts needed
1.5.4. Travel
1.5.4.1. Examples: Between work sits
1.5.4.1.1. Rules: can claim if itinerant or carrying tools
1.5.5. Self - Education
1.5.5.1. Examples: short cources, seminars
1.5.5.1.1. Rules: Must relate to current job (not new career) that tax will apply as soon as the role has been in placed
1.6. Rural Workerwear
1.6.1. What you can claim: (any work wear that is sun safe or has a company logo on them) - Steel capped boots (safety item) - Sun - Safe clothing (UPF 50+) - Water proof or thermal gear for outdoor/ ag work - Shearer's Jean & singlets (protect against wool oils )
1.6.2. WHAT YOU CANT CLAIM: - fashion jeans (even if "required to wear") - suits for office work - standard jeans with no protective function
1.7. Tools & Depreciation
1.7.1. Cost > $300 - depreciate
1.7.2. Use ATO effective life: - straight line (12.5% = 8/100) - Diminishing value ( 25% = 8/200)
1.7.3. Claim Portion
1.7.4. 🧠 Examples: Saddle ($3,000), owned 6 months, DV method (20%): ➤ Deduction = $3,000 × 20% × 50% = $300 Laptop ($800), 60% work use: ➤ Deduction = $800 × 18.75% × 60% = $90
1.8. Table Related Depreciation / Deductions
1.8.1. Items cost -- Tax Deducations
1.8.1.1. < $300 = 100% Deducations
1.8.1.2. > $300 and < $1,000 = "low value pool" - Demishing value Depr. 18.75% 1st year (year purchased). 37.5% assets already in the "pool"
1.8.1.3. > $1,000 = ATO Effective life
1.8.1.4. Any Private use reduces your deduction - Where assests cost is $1,000 plus, then # days owned is relevant.
1.9. Investment Property Deductions
1.9.1. What you CAN deduct :
1.9.1.1. Agents fees
1.9.1.2. Council rates
1.9.1.3. Loan interest
1.9.1.4. Maintenance
1.9.2. What you CANT deduct:
1.9.2.1. Loan principal
1.9.2.2. Travel to inspect (unless company - owned)
2. Tax Rates Part 1
2.1. Self - Assessment Tax System (Australia):
2.1.1. - You lodge your own tax return an (ATO assumes its correct)
2.1.2. ATO can amend returns if needed: - 2 years for individuals & small businesses - 4 Years for compaines, Trusts, large Businesses - Anythime if fraud or evasion is suspected
2.2. What is Taxable Income
2.2.1. Taxable Income = Assessable income - Allowable Deductions
2.2.1.1. Assessable Income: Ordinary Income = From regular activity (personal exertion, property, business activites) Statutory Income = Specially listed in law (specified under the act, Net Capital Gain, Dividend Franking Credits, Gov Grants) COMMON EXAMPLES: -cattle / grain sales (yes) - agistment income (yes) -goverment grants (mostly yes) -bank interest (yes) - gifts (no - exempt) -inheritance (no - not taxable) EXEMPT INCOME: - ag industry exit grants - scholarships (full-time students) - centerlink, disaster recovery payments - ADF overseas deployment pay
2.3. Allowable Deductions
2.3.1. General Deductions
2.3.1.1. Directly relate to earning assessable income: - work uniform, PPE - staff wages - fertiliser, fuel farm advertising Not Deductible if: -private/personal -capital in nature (unless laws allows it) - relates to exempt income
2.3.2. Specific Deductions
2.3.2.1. Written into Law - section of the ACT (depr,fencing,borrowing cost) - fencing - claim 100% - Super contributions (within the $30,000 CAP)
2.3.3. Substantiation Rules
2.3.3.1. To claim a deduction: - must keep receipts or records (diary acceptable if no receipt - 3rd party evidance) - Prove that you have incurred the expenditure - CGT (capital gain tax) records must be kept for 5 year after the assest is sold
2.3.3.1.1. INCURRED: when the business owes money as a result of a transaction - Obligation to pay
2.4. Medicare Levy
2.4.1. 2% of the taxable income
2.4.2. Low - income threshold (no medicare levy if below): $26,000
2.4.3. Extra for families [$43,846] & pensioners tax offset [$41,089]
2.4.4. Medicare levy surcharge applies to "high income earners" - no private hospital cover
2.5. Medicare Levy Surcharge
2.5.1. Applies if:
2.5.1.1. No Private hospital cover
2.5.1.1.1. Surcharge applies: - Singles excess must be $750 or less - Families excess must be $1500 or less
2.5.1.2. Adjustable taxable income > $97 ,000 (individual) less or $194,000 (family) less
2.5.1.3. Adjustable Taxable Income = Taxbable income + reportable fringe benefits + reportable super + investment losses (from rental property or shares)
2.6. Residency for tax Purposes
2.6.1. Australian tax resident if:
2.6.1.1. - You live /reside in Australia
2.6.1.2. -You are here 183+ days in the finanical year
2.6.2. Residents: taxed on global income
2.6.3. Non-Residents: only pay tax on Australian sources, no medicare
2.6.4. Note: If you leave australia for +2 years, you may cease being a resident (ATO IT 2550)
2.6.5. - You have an Australian domicile (home base)
2.7. CGT when leaving Australia
2.7.1. If ceasing reisdency, you may need to:
2.7.1.1. Pay CGT (capital gain tax) on shares and assests (or defer it)
2.7.1.2. Keep paying tax on "Taxable Australia Property" (farmland, buisness assests)
2.8. What about share investments
2.8.1. NOT CONSIDERED TO BE 'TAXABLE AUSTRALIAN PROPERTY'
2.8.1.1. 1. PAY TAX ON CAPITAL GAIN @ NORMAL TAX RATES BEFORE LEAVING AUSTRALIA
2.8.1.2. 2. ELECT TO NOT PAY TAX --- DEFER TAX UNTIL SHARES ARE ACTUALLY SOLD ---- PAY TAX AT NON-RESIDENT RATES
2.8.1.3. refer to non - resident tax rate table
2.9. Income Tax Rates (3 Taxable Groups)
2.9.1. Individuals
2.9.1.1. wages/salary, investment income
2.9.1.2. business profit
2.9.1.2.1. solor trader
2.9.1.2.2. share of partnership profit
2.9.1.2.3. Distribution from trust
2.9.1.3. which tax rates apply: - Resident individual tax rate
2.9.2. Company
2.9.2.1. which tax rate applies: - 25% flat rate ( turnover < 50million & 80% or less of the income is from passive source) - 30%flat rate ( turnover 50million + or > 80% of the income is from passsive sources
2.9.2.1.1. Passive income: includes certain types of dividend, interest, royalty, annuity and rental income. It also includes gains on the disposal of assets that produce passive income or that are not used solely in carrying on a business
2.9.3. Superannuation Fund
2.9.3.1. which tax rate applies: - income taxed at 15% flat rate - capital gain taxed at 10% (asset held longer then 12 months) - no tax is super is in 'pension phase'
3. Tax Rates Part 2 - HELP debt - Tax Offsets - Backpacker tax
3.1. Taxable Income
3.1.1. Profit for tax purposes
3.1.2. Taxable Income = Assessable Income - Allowable Deductions
3.2. How to calculate tax payable
3.2.1. Start with taxable income
3.2.2. Apply individual tax rates
3.2.3. Subtract non-refundable tax offsets
3.2.4. Add: 1. Medicare Levy (2%) 2. Medicare Levy Surcharge (if applicable) 3. HELP repayment (if income > $54,435)
3.2.5. Subtract: 1. Refundable offset (e.g franking credits) 2. Tax already withheld (e.g PAYG)
3.2.6. Final = Amount payable or refund
3.3. HELP Debt
3.3.1. Repayment starts at $54,435
3.3.2. Based on " Repayment Income" = Taxable Income + Reportable fringe benefits + Reportable super + Net investment losses + Exempt foreign employment income.
3.3.3. Indexed on 1 June each
3.3.4. Upcoming changes (2025): 1. Threshold rises to $67,000 2. Repayment based only on income above $67,000 3. One - off 20% balance reduction (June 2025)
3.3.5. Example: Jackie Taxable income = $135,000 Fringe benefits = $12,000 - Repayment income = $147,000 - HELP repayment = based on table % (e.g. 10%)
3.4. Tax Offsets
3.4.1. Low Income Tax Offset (LITO)
3.4.1.1. For individual residents
3.4.1.2. Non - refundable - only reduces tax to $0
3.4.1.3. Not available to minors on unearned income
3.4.2. Small Business Income Tax Offset
3.4.2.1. 16% offset, capped at $1000
3.4.2.2. Available to: 1. Sole traders, partnerships, trust with a turnover < $5m 2. You must be a partner or beneficiary (not just an Investor)
3.4.3. Spouse Super Contribution Offset
3.4.3.1. Up to $540 Tax offset
3.4.3.2. Spouse ATI must be < $40,000
3.4.3.3. Offset = 18% of contribution (max $3,000)
3.5. Tax Rule for Minors (under 18)
3.5.1. Earned Income (normal tax rate)
3.5.1.1. wages (arm's length)
3.5.1.1.1. 'arm's length' contract: When it is made by 2 parties acting freely and independently of each other, and without offering favour as a result of some special relationship, such as being related to one another.
3.5.1.2. Business income
3.5.1.3. Deceased estate / testamentary trust income
3.5.1.4. AUSTUDY or compensation payments
3.5.2. Unearned Income (High Tax Rate - 45% )
3.5.2.1. Dividends
3.5.2.2. Interest
3.5.2.3. Rent
3.5.2.4. Trust Distributions
3.5.2.5. Royalties, capital gains
3.5.3. Tip:
3.5.3.1. 🧠 Tip: If a minor invests their earned income (e.g., wages), any returns (e.g., interest/dividends) are considered earned and taxed at normal rates.
3.6. Backpacker Tax (WHM Visa 417 & 462)
3.6.1. Flat Tax Rate : 15%
3.6.2. No Medicare Levy
3.6.3. Employers must be registered WHM employers
3.6.4. Backpackers can withdraw super when leaving - Taxed at 65%
4. Assessable Income Topic 2
4.1. Types of Income:
4.1.1. Ordinary Income
4.1.1.1. Income from regular activities
4.1.1.1.1. Farm produce sales, wages, Interest
4.1.2. Statutory Income
4.1.2.1. Listed under Tax Act
4.1.2.1.1. Dividends, franking credits, capital gains
4.1.3. Exempt Income
4.1.3.1. Not taxed under law
4.1.3.1.1. Disaster payments, full - time study scholarships
4.2. Cash vs Accruals Method
4.2.1. Cash (Receipts)
4.2.1.1. When received
4.2.1.1.1. Wages, interest, sole traders
4.2.2. Accrual (Earnings)
4.2.2.1. When earned/ owed
4.2.2.1.1. Trading / manufacturing businesses
4.2.3. Tips: For ag income (e.g. wool grain), assess when the farmer has a legal right to payment - not necessarily when the money hits the banks.
4.3. Special Farm Cases
4.3.1. Wool sold June, paid August - Accrual: Income in June.
4.3.2. Grain in pool - Income when distribution declared.
4.3.3. Crowdfunded drought assistance: - Private use - not income - Business use - assessable income
4.4. Income That Is Not Taxable
4.4.1. Exempt
4.4.1.1. ADF deployed Income, disaster payments, scholarships
4.4.2. NANE
4.4.2.1. Super (60+), COVID payments, lottery winnings
4.4.3. Other non - assessable
4.4.3.1. Child support, personal gifts, hobby Income
4.5. Income vs Capital (key Agribusiness Concept)
4.5.1. Income
4.5.1.1. Regular, recurring
4.5.1.2. Crops, livestock sales
4.5.1.3. Taxable as Income
4.5.2. Capital
4.5.2.1. One - off, long - term
4.5.2.2. Land, water rights
4.5.2.3. Taxable under CGT rules
4.5.3. Analogy: "Income is the crop, capital is the land"
4.6. Livestock & Trading Stock
4.6.1. All livestock sales = income (Includes breeders & mustering horses)
4.6.2. Closing stock > Opening = Income
4.6.3. Opening > Closing = Deduction
4.7. Capital Gains Tax (CGT)
4.7.1. Applies to:
4.7.1.1. Assets bought after 20/ 09 /1985
4.7.1.2. Shares, land, Investment properties
4.7.2. CGT Does NOT Apply to:
4.7.2.1. Family home (PPR)
4.7.2.2. Cars
4.7.2.3. Personal use items < $10K
4.7.2.4. Collectibles < $500
4.7.2.5. Trading stock
4.7.2.6. Depreciable assets ( Plant and machinery)
4.8. Capital Gain Tax Calculation steps
4.8.1. Capital Gain = Sales Price - Cost Base
4.8.2. Subtract ( - ) any carried forward capital losses
4.8.3. Apply 50% CGT Discount (individuals only, if asset held > 12 months)
4.8.4. CGT Examples: Example 1 - Basic Capital Gain: Jane sells shares for $50,350, bought at $20,350 → Capital Gain = $30,000 → Discounted Gain = $15,000 Example 2 – CGT with Loss: Harry sells property for $800k, cost $200k, $100k carried loss → Gain = $600k – $100k = $500k → After 50% discount = $250,000 taxable gain
4.9. "You only pay CGT when you profit from selling, but you might only pay half if you wait at least a year."
4.10. When dose CGT happen?
4.10.1. Sale = Date when the contract is signed
4.10.2. Gift = Date ownership changes
4.10.3. Destruction = Date of insurance payment
4.10.4. Inheritance = Not a CGT event, cost base passed on
4.11. Gifts, Sales to Family, and Estates
4.11.1. Non - arm's length transactions: CGT still appplies at market value
4.11.2. Inheritance:
4.11.2.1. Pre - CGT asset: NO CGT
4.11.2.2. Post - CGT asset: CGT applies when beneficiary sells
4.11.2.3. Market value used as cost base at date of death
4.12. New & Special Taxes
4.12.1. Windfall Gains Tax (VIC)
4.12.1.1. Rezoned land gains
4.12.1.2. $100k + - Taxed
4.12.1.3. Up to 62.5% tax rate dpending on increase
4.13. Capital Losses
4.13.1. Only offset against capital gains
4.13.2. Cannot reduce ordinary income
4.13.3. Carried forward indefinitely
4.13.4. Choose which gains to apply them to
4.14. Share Disposal
4.14.1. Choose parcel for CGT:
4.14.1.1. FIFO = First bought
4.14.1.2. LIFO = Last bought
4.14.1.3. Hightest Cost First = Minimises CGT
4.14.2. Declare at tax return time
4.15. 🔁 Final Summary Table Key Concept / What to Remember: Assessable Income - Includes both ordinary + statutory Accrual vs Cash - Farming usually uses accrual Exempt/NANE - Don’t include on tax return Livestock - All sales are income CGT Applies? Yes = sale of shares, land; No = home, car 50% Discount -- Only for individuals, asset held > 12 months Capital Losses Offset CGT only, carry forward indefinitely
5. KEY TERMS:
5.1. Individual tax rates for the 2024-25 tax year: 25% for companies with turnover < $50m and 30% for those with turnover > $50m.
5.2. Superannuation fund income is taxed at a flat rate of 15%.
5.3. Taxable income is calculated as assessable income minus allowable deductions.
5.4. Medicare levy is 2% of taxable income, with specific thresholds for exemption.
5.5. Allowable Deduction ( EXPENSES)
5.5.1. Directly connected wwith assessable income [NARROW]
5.5.2. Incurred in running a business [BROAD]
5.5.3. Not private in nature - Capital [assets]
6. Individual Tax - Allowable Deductions Part 2
6.1. Motor Vehicle Expenses
6.1.1. To claim costs, consider:
6.1.1.1. Who owns it? ( you or the business)
6.1.1.2. What Type? ('Car' vs "Other vehicle' (e.g Ute > 1 tonne)
6.1.1.3. How is it used? Business % or personal use
6.2. Claim Methods for Cars (Employee or Sole Trader)
6.2.1. Method --- How it works--- When to use Set Rate per km Claim 88c/km (2024–25) for up to 5,000 km No receipts needed, must have log of work trips Logbook Method Claim business % of all costs + depreciation Must keep 12-week logbook + receipts for expenses Set Rate Example: Bob drives 8,000km for work (can only claim 5,000km) Deduction = 5,000km × $0.88 = $4,400
6.3. Vehicle Running Cost (logbook method only)
6.3.1. Claim %:
6.3.1.1. Fuel
6.3.1.2. Repairs / Servicing
6.3.1.3. Insurance & Rego
6.3.1.4. Roadside assist
6.3.1.5. Car Washes
6.3.1.6. + Depreciation or Lease payments
6.4. Depreciation Rules (Vehicles)
6.4.1. Applies to vehicles you own, not lease
6.4.2. Use:
6.4.2.1. 12.5% straight - line
6.4.2.2. 25% Diminishing value
6.4.2.3. REMEMBER: if the question ask you to maxiumise tax use 25% or if it wants you to mimiun tax use 12.5%. If it dosent say anything you can choose what you use depending on there job and income history. + Once you have choosen a method you have to use it all the time
6.4.3. Car cost limit applies (approx. $68,000 - $70,000 range)
6.4.4. Depreciation Example: Claire buys a ute for $77,000 (1 tonne+) → If she’s an employee, she’s not subject to car limit → If she’s a sole trader, she can claim depreciation fully under business rules
6.5. Vehicle Examples - How to Calculate
6.5.1. Example
6.5.2. Frank owns car and logbook 65% or business: Car running costs = $13, 920 Depreciation (car cost $59,136 x 25%
6.6. Working From Home (Employees)
6.6.1. Method: Fixed Rate
6.6.1.1. Claim: 70c/hour
6.6.1.1.1. Requirements: Log of actual hours worked
6.6.2. Method: Actual Cost
6.6.2.1. Claim: claim work % of actual expenses
6.6.2.1.1. Requirements: Receipts + 4 week diary allowed
6.6.3. Fixed rate includes:
6.6.3.1. Power /gas
6.6.3.2. Internet
6.6.3.3. Phone
6.6.3.4. Stationery
6.6.3.5. Additional claims: Depreciation on desk, chair, printer, ETC
6.7. Home - Based Business (sole trader, Trust , Partnership)
6.7.1. CAN CLAIM:
6.7.1.1. All running costs (as per WFH above)
6.7.1.2. Equipment depreciation (under simplified depreciation rules)
6.7.1.3. Occupancy expenses if there's a dedicated business room (e.g. signage, clients visit)
6.7.2. Examples
6.7.2.1. Loan interest
6.7.2.2. Rates
6.7.2.3. Home insurance
6.7.2.4. Depreciation of fixtures (e.g blinds, lights)
6.8. Important capital gain tax note (home office use)
6.8.1. Structure -- CGT when you sell home?
6.8.1.1. Employee -- dosent apply
6.8.1.2. Sole trader or partner -- yes (if space is business - dedicated)
6.8.1.3. Company or trust -- Yes ( needs rental agreement with homeowner
6.9. Quick summary table
6.9.1. Deduction Type - Who Can Claim - Notes 88c/km method | Employees | Max 5,000km, no receipts Logbook method | Employees & sole traders | Must record 12-week logbook, claim % of all car costs Car depreciation | Car owners only | Car cost limit applies Lease payments | Leased cars only | Claim business % use only Working from home 70c/hour | Employees | Log actual hours Working from home Actual Costs | Employees | Claim actual business portion, needs records Home-based biz expenses | Sole traders & partners | Full business expenses + occupancy costs if space is exclusive CGT impact on home | Sole traders & trusts | Proportional CGT applies if home used for business
6.10. Final Exam Tips Remember Set Rate = Simpler, Logbook = Higher claim Depreciate tools/equipment and vehicles if > (more than) $300 Occupancy expenses are only claimable if home is truly your business base Keep your logbooks and receipts for 5 years Know who owns the vehicle – this changes the rules!
7. Quick - Recall Table
7.1. Concept / Key Points: HELP Repayment - Starts > $54,435, based on repayment income LITO - Low-income tax offset, non-refundable Small Biz Offset - 16% discount for eligible sole traders/trusts Spouse Super Offset - 18% of up to $3,000 (spouse ATI < $40k) Minors – Earned - Normal tax rates Minors – Unearned - Taxed at 45%, no LITO Backpacker Tax - 15% flat, 65% super tax on exit, no Medicare levy
8. Individual Tax - Allowable Deductions Part 3
8.1. Self - education expenses
8.1.1. Part time study - You can claim if the study relates to your current job, Such as:
8.1.1.1. Improving skills for your role
8.1.1.2. Getting a Qualification that leads to a pay rise or promotion
8.1.2. YOU CANNOT CLAIM:
8.1.2.1. Study for a new career unrelated to current job
8.1.2.2. If you are not employed
8.2. What you can claim
8.2.1. Tuition fees (unless paid via FEE - HELP)
8.2.2. Textbooks (if > $300 = Depreciate at 18.75%)
8.2.3. Travel - Work to Study
8.2.4. Interest on study loans (if employment - related)
8.2.5. Conference / seminar costs
8.2.6. Home office expenses (see work from home rules)
8.3. Scholarships = NOT Taxable if:
8.3.1. Full - Time student
8.3.2. No Obligation to work for provider
8.3.3. Study is principal purpose
8.4. Scholarships can be included to your assessable incomeif part time
8.5. OTHER WORK DEDUCTIONS
8.5.1. Other Work Deductions: Deduction + Notes Income protection insurance | ✅ Deductible Work-related journals, magazines (work related + once printed are considered out of date | ✅ Phone/internet (work %) | ✅ Requires record or diary log Special licence renewal | ✅ (e.g. forklift, heavy vehicle) Getting a licence (first time) | ❌ Not deductible Donations ($2+ to DGR) | ✅ Must have receipt & no material benefit in return Tax agent fees | ✅ Claim in year paid
8.6. Prepay Investment Expenses
8.6.1. if you own an investment property, you can prepay up to 12 months of:
8.6.1.1. Insurance
8.6.1.2. Rates
8.6.1.3. Interest
8.6.2. Strategy for reducing taxable income in high - income years
8.7. Allowances & Travel Deductions
8.7.1. Type | Claim Rules Meal Allowance ✅ Max $37.65/meal (2024/25) without receipt if paid under award Travel Allowance ✅ ATO has set limits; keep diary + receipts Overseas travel (>6 nights) ✅ Need full travel diary and receipts Use of own car ✅ Use set-rate (88c/km) or logbook method
8.7.2. Even with allowances, you still need to prove you actually incurred the expense.
8.8. Superannuation Contributions (Concessional)
8.8.1. Whats included:
8.8.1.1. Suoperannuation guarantee - employer pays this
8.8.1.1.1. - Not apart of assessable income - 11.5% ordinary pay 2024/25 - 12% from 1st July 2025
8.8.1.2. Salary scarifice
8.8.1.3. Voluntary super contributions before tax
8.8.1.3.1. - Must be under 75
8.8.2. limited $30,000 per year from 1st July
8.8.2.1. $27,500 from 1st July 2021
8.8.2.2. $25,000 from 1st July 2017
8.8.3. Detail | 2024/25 Cap | $30,000 Includes | Employer Superannuation Guarantee + salary sacrifice + personal contributions Tax | 15% (30% if income > $250,000) Age limit | < 75 (must pass work test if 67+)
8.9. Reportable Superannuation
8.9.1. It’s the extra super contributions that are not part of the mandatory Superannuation Guarantee (SG) — usually made through salary sacrifice or voluntary pre-tax contributions.
8.9.2. = Extra contributions not part of employers SG
8.9.2.1. 👤 Meet Julie: She earns $120,000/year Her employer puts $18,000 into her super for the year
8.9.2.2. Step 1: Work out the mandatory SG amount - For 2024/25, the SG rate is 11.5% $120,000 × 11.5% = $13,800 → This is SG (mandatory)
8.9.2.3. Step 2: Find the extra (reportable) part Julie’s employer actually paid $18,000, so we subtract the SG: $18,000 – $13,800 = $4,200 → This is “Reportable Super”
8.9.3. 🔍 Why does this matter? Reportable Superannuation Contributions: Appear on your PAYG summary or income statement Are not taxed again, but... Can affect your: HELP repayment Family tax benefits Medicare levy surcharge Eligibility for government offsets or payments
8.9.3.1. ✅ In Summary: Term Meaning Superannuation Guarantee | Employer’s compulsory super (11.5%) Reportable Super | Extra contributions (e.g., salary sacrifice) above SG Total Super Paid | SG + any reportable contributions
8.10. Salary Sacrifice (ss)
8.10.1. Reduces Taxable Income (so you pay less tax now)
8.10.2. Still counts towards $30k concessional cap
8.10.2.1. Salary sacrifice means: You agree to give up part of your salary, and instead Your employer puts that amount into your superannuation fund (before tax)
8.10.3. Employer Superannuation Guarantee is based on your reduced scarifice salary - Not your total pckage
8.10.4. Example Barry's total salary package = $150,000 This includes: $15,000 car (company-provided) $20,000 housing (company-paid) $115,000 cash salary (what he’s paid directly) Now Barry chooses to salary sacrifice $15,000 So his new cash salary = $100,000
8.10.4.1. Before Salary Sacrifice Salary = $115,000 SG = 11.5% × $115,000 = $13,225
8.10.4.2. After Salary Sacrifice Salary = $100,000 SG = 11.5% × $100,000 = $11,500
8.10.5. Key Takeaways: Yes, salary sacrifice reduces your taxable income BUT, it also reduces how much your employer contributes under SG This means you might need to make up the gap with your own contributions to hit your retirement goals
8.10.6. “Salary sacrifice is great for tax — but be aware it can lower your employer’s super contributions unless your contract says otherwise.”
8.11. Catch - up Contributions (5 - Year Rule)
8.11.1. When you don’t use all of your annual concessional cap, the unused portion carries forward for up to 5 years — so you can use it in a future year when you: - Earn more money - Have a capital gain - Want to reduce your tax But you can only use it if your super balance is under $500,000 on 30 June the year before.
8.11.2. Rules -- Details
8.11.2.1. Started 1st July 2018 = Can use unused cap from past 5 years
8.11.2.2. Super balance must be < $500k = As at 30th June previous year
8.11.2.3. Great strategy for = High Income year or capital gain year (asset sold for more then you brought it for)
8.11.3. Example Bob's Goal: Reduce tax because he made a big capital gain from selling land. Who is Bob? - Self-employed (runs his own farm business) - Super balance on 30 June 2024 = $150,000 ✅ ( under the $500k limit → he’s eligible) - Sold property in March 2025 → made a $240,000 capital gain - His estimated taxable income (Assessable income - Allowable deductions) for 2024–25 = $320,000 How Can Bob Lower His Tax? Bob can contribute money into his super, and that amount gets taken off his taxable income. The catch-up rule lets him contribute more than the usual $30,000 cap, using the unused amounts from past years.
8.11.4. | Year | Cap (Limit) | Bob Contributed | Unused Cap 2021–22 | \$27,500 | \$7,500 | \$20,000 | | 2022–23 | \$27,500 | \$7,500 | \$20,000 | | 2023–24 | \$27,500 | \$10,000 | \$17,500 | | 2024–25 | \$30,000 | \$0 (so far) | \$30,000 | TOTAL= $87,500 unused from past years + $30,000 = $117,500 total cap Bob can use now
8.11.5. But in the earlier example, the total used was $137,500 — that means either: He had additional unused caps from 2018–19 or 2019–20, and they were still valid, Or the original explanation included 5 years of unused caps before expiry. Either way — Bob can catch up on past unused caps + use this year’s cap
8.11.6. He contributes $137,500 into super before 30 June 2025. That reduces his taxable income from $320,000 → $182,500 Less tax = more money saved His super fund will pay 15% tax on the contribution: $137,500 × 15% = $20,625 tax So $137,500 – $20,625 = $116,875 goes into Bob’s super
8.11.7. Steps + What Bob Did Why It Mattered.... 1️⃣ Had unused cap from past 5 years - Catch-up rule lets him use it 2️⃣ Super balance <$500k So he's eligible 3️⃣ Contributed $137,500 to super Big tax deduction 4️⃣ Reduced income from $320k to $182.5k Lower tax payable 5️⃣ Saved tax, built super | Smart planning year
8.11.8. "If you didn’t use your super cap before — and your balance is under $500k — you can pile it all in now and get a big tax break."
8.12. Smart Tax Strategies
8.12.1. Keep logbook & receipts
8.12.1.1. Claim more vehicle / home deductions
8.12.2. Use fixed rate or actual cost for WFH
8.12.2.1. Maximise home office deduction
8.12.3. Salary scarifice to super
8.12.3.1. Reduce income & tax
8.12.4. Private hospital cover
8.12.4.1. Avoid Medicare Levy Surcharge if income > $97k
8.12.5. Prepay investment expenses
8.12.5.1. Bring Forward deductions into high income years
8.12.6. Prepay investment expenses
8.12.6.1. Bring forward deductions into high income years
8.12.7. Match concessional super with capital gains
8.12.7.1. Reduce capital gain tax impact
8.12.8. Catch - up super contributions
8.12.8.1. Offset high income with larger super deduction
8.13. Quick Recap Table
8.13.1. | Deduction Type | Claimable? | Notes | Diploma for promotion | ✅ | Must relate to current job | | Phone (farm calls) | ✅ | Portion used for work only | | Gun licence (first time) | ❌ | Getting licence is private | | Heavy vehicle renewal | ✅ | Ongoing licence = deductible | | Donation to approved charity | ✅ | Must be a DGR + no reward | | Salary sacrifice super | ✅ | Must stay under \$30k cap | | Fee-HELP course fees | ❌ | Cannot claim (loaned money) | | Travel with meals (overnight) |✅| Must have records/allowance |