With EOFY approaching, now is an ideal time to review your tax strategy. For high-income earners, it’s a crucial step to minimise overpaying tax, which may have a broader impact on your cash flow and financial planning.

Comprehensive EOFY tax planning helps you assess your current financial strategy, make necessary adjustments and optimise tax outcomes with practical steps, such as utilising concessional caps and/or tax offsets.

Incorporating a tax strategy into your overall financial plan helps provide clarity, so you can move towards your long-term financial goals with confidence.

Why a Tax Strategy is Important

Under the ATO’s staggered tax system, high-income earners in Australia face effective tax rates of between 37% and 45%, excluding Medicare levies and surcharges.

Without tax planning, professionals and business owners may be paying significantly more than necessary. A comprehensive tax plan can help you structure investments to legally minimise tax where possible, ensuring your savings are strategically positioned for sustainable wealth management.

With a tailored tax strategy, you pay the legal minimum taxes required, freeing up savings to incorporate into your business, investments or retirement planning.

Practical Strategies for Tax Efficiency

Depending on your situation, there are practical steps that may help optimise your tax position. These include:

• Concessional caps – Allow you to take advantage of lower-taxed super contributions (currently up to $30,000) for a potential annual saving of thousands on the 45% marginal tax rate. For balances under $500,000, unused contributions can be carried forward within 5 years.
• Contribution timing – Contributions are taxed when received by funds, rather than paid, so timing is crucial. Exceeding concessional or non-concessional caps in a financial year results in higher tax.
• Superannuation diversification – With the recently introduced Division 296 Tax applicable to balances above $3 million, diversifying some superannuation into other investments may be a practical step to minimise additional tax.
• Family trusts – Provide income splitting across family members, allowing for strategic estate planning and lower rates than the top individual marginal tax rates
• Investment bonds – Provide tax efficiency with earnings taxed internally up to 30% and withdrawals tax-free after 10 years
• Capital gains tax optimisation – Helps reduce tax by splitting sales across financial years and offsetting gains with realised losses. May be utilised in tandem with negative gearing to offset taxable income with any investment losses.
• Tax offsets – Distinct from a tax deduction, an offset provides a direct reduction in the amount of tax payable on your taxable income. Available for small business owners, seniors and health insurance holders.

EOFY Tax Planning as Part of a Holistic Financial Strategy

With tax strategies for high-income earners needing a little more focus, EOFY is an ideal time to check that your tax plan is best suited to your current financial position and long-term investment strategy.

At Newealth, we help you get a clear picture of your finances with tailored guidance across tax, investments, personal insurance, superannuation and retirement. With comprehensive advice, you can feel confident that you’re equipped with an optimised, effective tax strategy.

If you’re unsure of your tax obligations or would like to review your tax planning, contact us for a confidential discussion.

General Advice Warning:

The information in this blog is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider whether the information is appropriate for you and seek professional advice before making any financial decisions.
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