In this episode, Mark and Shani unpack some of the most surprising insights from Adrian Raftery’s “101 Ways to Save on Tax Legally” (2025–26 edition) and highlight strategies that many Australians overlook.

Whether you own property, work from home, or support a dependent family member, these tips could make a meaningful difference to your after-tax outcomes.

Read the full article here.

You can find more tax insights below.

Future Focus: Are franking credits ‘free alpha’?There’s always an opportunity cost.

Avoiding the superannuation death tax.How to optimise tax savings on superannuation inheritance.

Managing tax when investing as a couple. How to optimise your returns.

Investing in an ETF listed overseas. Investors are turning overseas for greater choice but there are some considerations.

Should you sell an underperforming ETF? Lagging investments happen to the best of us.

Future Focus: Who gets your super? And how much tax they’ll pay.

Avoid paying extra tax in super. High income earners should plan ahead for their Div 293 liabilities.

See the transcript of the episode below:

Shani Jayamanne: So today we have an episode on a book.

Mark LaMonica: Not our book.

Jayamanne: Not our book. And we’ve done quite a few of these recently, but this isn’t taking the top lessons that we garnered from it. It’s looking at some of the most surprising points to note in the book.

LaMonica: And the book, you read the book. I have not read the book. Shani’s very into tax. So unsurprisingly, the book is Adrian Raftery’s 101 Ways To Save On Tax - Legally in the 2025-26 financial year.

Jayamanne: Great title.

LaMonica: I mean, it sounds like a page turner. But at least you’re not going to be surprised what’s in it.

Jayamanne: Yes.

LaMonica: And this was actually one of the books that we mentioned in our Christmas Gifts episode. So that was an example of something you can get an investor in your life. I guess if you don’t like them, you get them the book on 101 tax tips. And despite all my joking about tax, saving on tax is something that a lot of investors tend to focus on. And that’s because, of course, that just generates a return. And it’s a really easy way to do it.

Jayamanne: And what really matters is the final number that ends up in your bank account and anything that minimizes what detracts from that number is going to improve your outcomes.

LaMonica: And I think a lot of investors really focus on finding good investments. So they could look at what’s the cheapest ETF for the exposure they’re looking for, what’s going to beat the market, what’s going to beat whatever index they’re trying to invest in. And in best case scenarios, maybe you can exceed the index by 1% to 2%. Very few people do that. But tax effective investments and tax minimization policies usually provide a much larger benefit. So you see results in the same financial year. Well, with a lot of the other ways that people try to improve their investing outcomes, you can only really see the impact of your good choices through years and years of compounding.

Jayamanne: Exactly. And I think investing in a tax effective vehicle like Super could reduce your tax obligations by 32% or 45% in retirement. Investing in a company that offers a fully franked dividend could offer you a 30% credit. Investing in an investment property that offers negative gearing provides you with an average deduction of $8,702 a year, according to the Property Council of Australia.

LaMonica: And these are well known ways of reducing your tax obligation and maximizing that final return that you get in that bank account. And Adrian, who you tell me is known as Mr. Taxman.

Jayamanne: Yes.

LaMonica: He has, of course, released this new book, The 101 Ways to Save on Tax Legally. And some of the ways that he outlines are obvious to seasoned investors like the things you just mentioned. Others are more nuanced part of the Australian tax system.

Jayamanne: So today we’re going to go through a few of them. And the first is about investment properties. And we know Aussies are property obsessed, but a lot of Australians, especially those that are younger, are locked out of the housing market.

LaMonica: And then, of course, if you can afford to buy a house, you tend to concentrate a lot of your wealth in that single asset. So 29% of Australians have so much of their cash flow tied up in their mortgage payments that they are under mortgage stress.

Jayamanne: So affordability is a huge issue with investment properties. And negative gearing does help. It does reduce the cost of maintaining a property as an investment.

LaMonica: But there are some nuances involved. You only receive your tax refund at the end of the financial year. So you’ve got to front all of those costs before you get those benefits from negative gearing. We’ve got a tip later on to help with this. But back to property. Some Australians, locked out of the housing market in capital cities, might have considered going regional for more affordable options. But fewer Australians realize that you can actually look abroad and you can apply the same negative gearing rules to overseas properties.

Jayamanne: So if you own an investment property in another country and it’s generating rental income, you can claim deductions for eligible expenses. So mortgage interest, maintenance costs and property management.

LaMonica: And to do this, the income and expenses must, of course, both be reported to the ATO. And while there might be added complexities such as exchange rates and foreign tax treaties, the underlying principle remains the same. If the property is genuinely held for income producing purposes, you may be able to offset the loss against your Australian taxable income.

Jayamanne: So I like to daydream Mark.

LaMonica: I’m well aware.

Jayamanne: So sometimes my husband will buy me a lotto ticket and he’ll ask me to plan out what I do if I want that particular jackpot amount for the week.

LaMonica: Fun times in your household.

Jayamanne: Specifically the first 24 hours, what I would do after I found out that I won.

LaMonica: I assume the first call would be to me to quit your job.

Jayamanne: I’d show up at work. I would.

LaMonica: To quit in person.

Jayamanne: Yeah, probably.

LaMonica: Thank you for that.

Jayamanne: I feel like I owe you that. But I follow a bunch of property pages on Instagram that have cheap villas in Tuscany, French Chateaus, Swiss chalets. And there’s one page where all the properties are under 100,000 euros. And I like to daydream about that. So I could go out and buy a $20,000 house in the French countryside that’s advertised on Instagram. But for those that are less inclined to impulse purchase through a social media platform, there are still reasons why people might own a foreign property. And as a number of foreign born Australians increase, so does a base of potential investors that would have an adequate understanding of the overseas property market.

LaMonica: So can we dive into this a little bit? So your daydream, your dream is to buy a house that costs significantly less than the current house you live in in Sydney.

Jayamanne: Why not both?

LaMonica: Well, I’m just saying you can sell your current house and go buy a bunch of these $20,000 houses in the French countryside.

Jayamanne: I guess so.

LaMonica: But anyway, something to something to think about. And I think the point about a lot of the migrants to Australia is that they may have properties. So, you know, people, both of us came to this country at very different times in our lives. But yeah, there are some people that own investment properties overseas like me, for example.

Jayamanne: Yeah. So that’s a really good point, Mark. Do you want to go through why you’ve chosen to have and keep continuing to invest in property outside of Australia?

LaMonica: I mean, I think for the most part, it’s just worked out fairly decently. And the reason and I’ve talked about this part of the reason that I like investing outside of Australia because the properties that I have are all cash flow positive. And so I’m obviously an income investor. I want that cash flow. It is fairly difficult for somebody without a huge down payment to buy an investment property in Australia that is not negatively geared. So I like the fact that I’m actually getting cash flow from them.

Jayamanne: All right, makes sense. So let’s move on to the next tip, which was low value pooling and a lot of property investors or businesses may be familiar or utilized appreciation in every tax filing, but it’s often overlooked or underutilized by individual investors.

LaMonica: And the ATO allows for low value pooling, which is a method of simplified depreciation for assets that cost less than $1,000, like many of the houses Shani’s looking at in the French countryside. And the point of this is the whole pool gets a more favorable tax rate of 37.5%.

Jayamanne: So instead of tracking these items separately, you’re able to group them into a pool and claim a higher rate of depreciation. So for investors with rental properties, it could include items such as appliances or furniture. For individual investors who are working from home, it could be home office technology or furniture. And the benefits to using this include that it reduces your administrative burden and allows you to claim deductions quicker.

LaMonica: And this might seem small and the amounts may seem very small, but they can add up over time, especially with a lot of us who work in offices, but also have a home office that we’ve worked from since the pandemic.

Jayamanne: Your office furniture is just one piece of furniture, Mark. It’s this like 40 year old leather chair that you sit.

LaMonica: The leather chair is not 40 years old. Like we talked about this before that you think that I’ve Warren Buffett furniture. And that does not mean I have the style of a billionaire. I think my leather chair is only probably about 15 years old.

Jayamanne: So let’s move on to the next tip. It’s that your income protection insurance is tax deductible. And a lot of us really don’t like paying insurances because it just feels like a cost without much return. But premiums for income protection insurance, so policies that cover you if you’re unable to work due to illness or injury, are generally tax deductible if the policy is held outside of super.

LaMonica: And income protection replaces taxable income. So the premiums are considered an expense incurred in earning that income. So for that reason, other insurance types like life insurance, trauma insurance, or total and permanent disability insurance or TPD are not tax deductible.

Jayamanne: So this allows Aussies with income protection policies to mitigate risk and soften the blow of the premiums. And it sounds like a much more palatable scenario. All right. So we mentioned earlier that scenario where you have an investment property, where you have all these lumpy costs during the year, but you have to wait to file your tax return for the negative gearing benefits to provide you with some relief. Our next tip that we liked from the book was that pays you go withholding variation.

LaMonica: And many people look forward to tax return time. Neither you or me though, because I know we both usually get tax bills. We file it very different times though. I file my taxes not on the last day this year. I filed them on October 28th.

Jayamanne: Well done. Improvement.

LaMonica: Which is impressive. But many employees do receive a tax refund because too much tax has been withheld from their pay or their adjustable income is lower than their income from their employer.

Jayamanne: Yeah, exactly right, Mark. And if I had an investment property, there’s no way that Lucy from payroll would no more care about when I file my taxes. So I’m paying more tax as I go. And with a PAYG variation, you’re able to submit a form to the ATO to have less tax withheld from each pay period if you expect to claim large deductions. And we use the investment property as an example that you might also have significant deductible work expenses. So anything that lowers your adjusted income.

LaMonica: And to be clear, Lucy from payroll is a real person. Lucy does the payroll at Morningstar. And Shani harasses her weekly about something tax-related.

Jayamanne: Poor Lucy.

LaMonica: Yeah. But the good thing about this approach is instead of waiting until tax time for a refund, the benefits just flow throughout the year. And this approach can offer significant cash flow relief if you have large lumpy expenses throughout the year. But I think one important call out to make is to take advantage of this. You really need to plan carefully and have a relatively accurate understanding of your costs over a financial year. So the last thing you want to do is turn your tax refund into a tax bill without expecting it.

Jayamanne: All right. So the last tip, we’re going to talk about DICTO, dependent invalid and carer tax offset. This is a lesser known provision in the tax system and it applies if you support a dependent who is genuinely unable to work due to a physical or mental condition. It can also apply if you care for your spouse’s parents who meet the certain eligibility criteria.

LaMonica: So if you’re caring for an elderly parent, maybe an elderly coworker, but an elderly parent, a spouse, their parents, your child who is age 16 or over, or your siblings age 16 or over, you might be entitled to this DICTO offset.

Jayamanne: And this is increasingly prevalent for a lot of Aussies. We’ve done a podcast episode before on the sandwich generation, but that term refers to the growing number of working Aussies that need to juggle the caring needs of children and elderly parents.

LaMonica: And there are a few parallel issues that are making the situation worse. First is the cost of living and housing in Australia. If you have been living under a rock, it is high and that is keeping many younger people in the family home for longer. And then the second issue is not really an issue, but it’s longer life expectancies for Aussies. So longer life spans are generally positive, but it often means that you’re facing years of living with chronic illness or disabilities.

Jayamanne: So unlike a deduction, this is an offset. An offset directly reduces the amount of tax that you pay. So to claim DICTO, you need to be deemed eligible. There’s a bunch of criteria from the ATO that I’ve linked in my article. We’ll put it into the episode notes. But the main criteria is that your dependent is on a government disability payment. But if you satisfy the criteria, you can claim up to $3,300.

LaMonica: And you can also do this multiple times. So you can receive multiple DICTO grants. You just have to have more than one dependent over the course of a year.

Jayamanne: So those are the tips that we’ve plucked out of the book. There’s many more, one hundred and one in total to be exact. But I think with this book, what Raftery is showing that the Aussie tax system…

LaMonica: Mr. Taxman, Shani.

Jayamanne: Mr. Taxman,proper title can occasionally be more generous than we think. And the rules can be complex, but understanding them can help contribute to better outcomes. And his book is released each year to reflect changing tax rules.

LaMonica: We should have come up with a book idea that we could release each year.

Jayamanne: Yeah. That would have been smart.

LaMonica: Yeah, you’ve written an article on this because you love tax. The link for that is in the episode notes. And within the article, you have referenced where you can go for the full rules and criteria for each of these tips. If it’s something you’re looking to explore. So that’s it. The two of us and Mr. Taxman, we appreciate you listening.

Invest Your Way

A message from Mark and Shani

For the past five years, we’ve released a weekly podcast and written on morningstar.com.au to arm you with the tools to invest successfully. We’ve always strived to provide independent, thoughtful analysis, backed by the work of hundreds of researchers and professionals at Morningstar.

We’ve shared our journeys with you, and you’ve shared back. We’ve listened to what you’re after and created a companion for your investing journey – Invest Your Way. Invest Your Way is a book that focuses on the investor, instead of the investments. It is a guide to successful investing, with actionable insights and practical applications.

If anyone would like to support this project you can buy the book now. Thanks in advance!

Purchase from Amazon

Purchase from Booktopia