10 December 2025
As a business owner or high income earner, you’ve worked hard to get where you are. So when tax season rolls around, and almost half your income is taken by the ATO, it can sometimes feel like you’re being penalised for that hard work.
High income earners are those earning anywhere from $190,001 per year upwards. This income level sees you placed in the highest tax bracket, at 45%, or 45c for each $1 over $190,000.
While paying this tax feels inevitable, there are strategies that can be put in place to help reduce a person’s taxable income. And rather than simply lodging a tax return at the end of the year, they can be put into action year round, helping you to feel more in control.
As we are now half way through the 2026 financial year, it is the perfect time to address your planning for the back half of the year. Here are three clever strategies that AR & B Advisors partner with our clients to achieve.
1. Be smarter about asset and equipment purchases
A canny business owner will already know that purchasing a new asset or piece of equipment provides them with the benefit of depreciation – but that’s a long-term game. There are ways to make the most of it now.
A sensible strategy is to bring necessary purchases forward into the current financial year. For example, rather than waiting to buy a computer, printer, or new tool, consider bringing it forward to the current financial year. If it’s under the instant asset write-off limit of $20,000, the tax reduction can be realised immediately.
For bigger purchases, high income earners should also consider equipment finance options rather than an outright purchase. After all, it’s no use spending a large sum of money just to reduce your tax if it means you then can’t pay your bills. “Your money works hardest for you when it’s in your account,” AR & B Advisors Director, Ryan Brown states. “It’s better to preserve your capital and keep it in the business.”
However, the key to being a truly tax effective investment is making sure they’re actually required. “I’ve never been one to spend money just to save tax,” says Ryan. “If your tax advisor is recommending purchases you don’t necessarily need, get a second opinion.”
2. Take advantage of a company tax rate by setting up a bucket company
A high income earner can set up what’s known as a bucket company system, which helps to minimise the tax an individual pays on dividends from a business.
It works much the way it sounds. Think of three buckets, hanging in a diagonal line, water pouring from one to the next. The first bucket, the operating company, distributes a proportion of its income (via a dividend) into the second bucket, a family trust.
Here’s where it gets smart. The trust is able to decide how to distribute its income. Typically, it will distribute some to individuals – but just enough to avoid tipping them over to the next tax bracket.
The rest is then distributed to the final bucket, which is a corporation. All income for this company is at 25-30%.
This way, the individuals still get the long-term benefits of shares or investments held within the bucket company, without falling prey to the highest personal tax rates.
However, it’s not something that should be entered into lightly. “Bucket companies can work effectively – but only if you use them right,” Ryan cautions. “They’re fairly high on the ATO hit list, so if they’re not set up properly, it can bite back hard.”
The recent Bendel case, which has seen the Court raise questions about the nature of income earned from its trust, makes clear the risk involved when entering into a structure like this. “The key is partnering with a tax advisor you trust to make sure your structuring is done correctly,” Ryan re-affirms.
3. Use superannuation contributions to your advantage
Making tax-deductible super contributions still remains one of the easiest ways for a high income earner to reduce their taxable income.
Under current legislation, the cap on concessional superannuation contributions is $30,000. When handled correctly, this would potentially be enough to see a person’s income reduce to a lower tax bracket. Even if you don’t use the whole cap, there are still benefits: unused contributions from previous five years can be carried forward to the current financial year.
To maximise the effectiveness of this strategy, it’s important that all super contributions are kept track of. “Otherwise you’re just transferring money into an account you can’t touch, for no immediate benefit,” Ryan cautions.
The best way to minimise tax? Have a plan.
“The starting point is to have a good relationship with your tax processes,” Ryan notes. “Make it business as usual to stay up to date with your lodgement deadlines, and actively engage with your tax advisor throughout the year.”
This is where a tax advisor can help out for the long term. They can partner with high income individuals to ensure their tax structures are correct, regularly reviewing tax reporting and tax structures to ensure they’re accurate, and that they’re following the rules. An advisor can also provide guidance on other wealth creation strategies that suit the individual, and help them towards their financial goals.
“It all comes down to planning,” Ryan states. “Start at the beginning of the financial year, get your strategies right, and you’ll be able to safely and securely structure your income in a way that minimises your payable tax.”
AR & B Advisors partners with high income earners to help you keep more of your income where it should be. We can work with you to identify the best tax minimisation strategies that will work for you situation, and ensure they continue to work for you for the long term. Get in touch with us today to learn more.