Tax Planning Tips: Tax Offsets


Tax Planning

The end of the financial year is just around the corner. That means you don’t have long left to maximise your tax offsets for your annual income tax return.

Firstly, it’s important to understand the difference between a tax offset and a tax deduction.

Both reduce the amount of tax you pay.

  • A tax offset (also known as a tax rebate) can be used to reduce the amount of tax you owe on your taxable income.


Imagine that your taxable income is $80,000 and that you have $5,000 in tax offsets that you can claim.  The tax payable on your taxable income would be $17,547 less your $5,000 in offsets (i.e. $12,547)

  • A tax deduction on the other hand is a legitimate expense that reduces your taxable income.


Imagine that your taxable income is $80,000 and that you have $5,000 in tax deductions that you can claim.  The tax deductions would reduce your taxable income to $75,000, and your tax payable would be $15,922.

Maximising both your tax rebates and deductions makes good financial sense.

Maximising Your Tax Rebates

Examples of tax rebates include:

  • private health insurance.

The rebate depends upon your income level, and it can be made available either as a reduction in your health insurance premium or as a direct refund to you. Individuals can have a taxable income up to $140,000 and still be eligible for a partial rebate, while families can earn up to $280,000.

Private health cover also helps you to avoid paying the Medicare Levy Surcharge. This is a fee of 1.5% of taxable income that is levied on individuals and families above certain income thresholds ($90,000 for individuals and $180,000 for families) who don’t have minimum levels of private health cover.

  • franking credits

If you have received dividends from shares you hold in an Australian company during the financial year, you’re entitled to a credit for the tax that the company has already paid on shareholder profits. This credit is offset against the tax you owe as an individual.

  • super contributions on behalf of your spouse.

You can claim a rebate of $540 for a super contribution made on behalf of your spouse, provided that the combined total of their taxable income, reportable fringe benefits and employer super contributions is less than $37,000.

You can claim a partial rebate if their total taxable income is between $37,000 and $40,000.

  • the super income stream tax offset.

If you’ve received income from an Australian super income stream, you may be entitled to a tax offset equal to either:

  • 15% of the taxed element
  • 10% of the untaxed element.

How we can help

At Create and Protect Financial Planning, we can help you to plan your affairs tax-effectively by maximising both your tax rebates and tax deductions. We’ll take the time to understand your needs and goals so we can provide you with the best possible advice.

Call 1300 707 955 or email to find out how we can help you.

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