The new financial year is just around the corner so here are ways to save on your tax, legally

Time to juggle your finances, like claiming for that fake red nose if you’re a clown.

We’re heading towards the start of a new tax year and this time it has a twist because a range of personal tax cuts come into play.

Once we enter FY2025 on July 1, many tax strategies will change and, when coupled with a string of new superannuation settings, it should amount to new opportunities for the active investor.

The tax system is littered with surprises and most of them are negative. But for the connoisseur there are always positives too. Did you know that you can claim a briefcase, or indeed a work handbag? And if you ­access the downsizer super scheme you don’t have to buy a smaller house? Yep, it can be bigger (this policy is clearly a work on progress).

This week I caught up with Mr Taxman – that’s Adrian Raftery, author of 101 Ways to Save Money on Your Tax, Legally – and asked him for the six takeaways every investor should know this year. (He’s also a guest this week on the Money Puzzle podcast).

1: The personal tax rates in Australia do not change very often: So it’s a big deal that they are coming down across the board on July 1.

For active investors, it means deductions next year will be smaller than this year because the key rate (marginal rate) will most likely have dropped.

So it makes sense to make any deduction you had planned in the tax return this financial year. The outstanding opportunity is prepaying any tax-deductible interest you may have owing, as you get a better bang for your buck. The same goes for any similar expense where there is scope to move the payment before June 30.

2: These days many people work from home in a permanent manner – it might be two days a week, every week of the year. It’s time to get serious about the tax deductions you can make on the expenses you have in your home.

Raftery says there are two ways of doing deductions – as always with the ATO, there is an easy way and a hard way, and the hard way should be more rewarding.

In relation to home office costs, he suggests to concentrate not on the “67c per hour” worked blanket deduction (open to everyone who keeps a daily log), but to itemise in full your costs and work on the basis that your combined deductions will then be bigger than the “off the shelf” method available from the ATO.

3: For property investors, borrowing rates are relatively high right now and, if the economists are correct, rates should be lower this time next year. As a result, negative gearing may not be as tax-efficient in the months ahead as it is now. Take advantage of this by bringing expenses forward in relation to investment property.

4: In superannuation, the ­opportunities may be the other way around. In other words, it may be better to do some things later rather than earlier.

That’s because the amount you will be able to put into super contributions is going to go up after July 1.

In fact, a range of super measures are changing. The Superannuation Guarantee Charge (which dictates how much you must put into super each year by law) rises from 11 per cent of your salary to 11.5 per cent.

If you want to make voluntary pre-tax super contributions on top of the SGC, that cap moves from $27,500 to $30,000 on July 1 (Remember, you must subtract the SGC amount from the total allowable pre-tax contribution).

Changed super thresholds also mean the amount you can carry forward also goes up, along with related increases in post-tax contributions.

Sitting somewhere between super and property investing is the “super downsizer program”, where a person over 55 can bypass super rules and put in $300,000 from the sale of the family home held for more than 10 years.

Under the rules, you have to sell your house – but you don’t have to buy a smaller house. You don’t even have to buy another house at all … who knew?

5: Transport costs are still a key deduction for the everyday investor or anyone with a “side hustle”.

In common with working from home, there is an easy and hard way to get tax deductions – and again the most lucrative route is the harder route.

For running a car, that means not taking the “off the shelf” deduction of 85c per kilometre (under 5000km), but keeping a 12-week log book and then claiming receipts for all costs in relation to transport in your activity. Remember, the ATO gives nothing away easily, but it rewards the obsessive record keepers.

6: The oddities of the tax system never end – you can claim a briefcase or a handbag for work (no gender discrimination here).

Similarly, if your work involves something you would not buy otherwise, you can claim that item. You can’t claim a suit if you are an office worker because you might wear that suit to the races.

“But a sword swallower could claim a sword,” Raftery says, “or a clown could claim a fake red nose: now that would be a work-related expense.”

James Kirby hosts the twice weekly Money Puzzle podcast