With the end of the financial year approaching, business editor David Potts tells how you can pay less tax.

Blink and you'll miss Peter Costello's tax cut which starts on July 1. Better to give yourself a tax break instead.

So here goes.

1 The $300 threshold for work deductions is a good start since for many taxpayers it's worth more than Costello's tax cut. You don't need to have receipts for it, but keep a diary. A simple notepad, in which you write down everything you've had to buy for your job, will do.

This year you can claim your sunnies if you work outdoors and since this is the first time you can, the Tax Office won't even demand a receipt, allowing $85. Mind you, if you feel you need a pair with night vision, built-in TV screen and internet access, you'd better ask for a receipt.

The taxman also publishes a list of allowable deductions for each occupation.

Don't forget work deductions can include union or professional fees. If these push you above $300, you can still claim other work expenses but you'll need to have receipts for them.

If you need to replace your tools of trade, do it now. That way you'll get a deduction for them this year. By the same token, it might pay to buy some on June 30, and others on July 1. That's because an item that you need for work say a mobile phone can be claimed in one hit if it costs less than $300. Otherwise it has to be depreciated, which puts the tax benefits back years.

2 Investment deductions have also been something of a goldmine for some taxpayers (make that non-taxpayers), but this year the taxman is getting tough. Don't be put off. Some legitimate deductions on an investment property are easily overlooked, including body corporate fees, council rates and cleaning.

As well as interest payments, some borrowing expenses are deductible. Bring forward any necessary repairs on your investment property you may as well get the tax deduction sooner than later.

3 Paying the interest on your investment loan a year ahead brings big tax savings, and so is a favourite suggestion of accountants, though it's arguable whether you're really better off. It was also a favourite ploy of June 30 tax-scheme promoters because it meant you could get back half the interest paid in a tax break only a month after paying it.

The Tax Office has clamped down on that, although it remains true that you can get half your money back by pre-paying the interest on loans for legitimate investments. Frankly, the Tax Office has saved a lot of people from themselves here. Getting 48.5 cents back from the taxman for every dollar spent when you lose the other 51.5 cents is no way to get rich.

Still, on a good investment pre-paying brings other benefits, too. Apart from getting your tax break back early, usually there's a discount to the interest rate for paying in advance. For you to come out ahead, you need a decent discount.

By the way, the pre-paid benefit can be used on any investment loan, including instalment warrants, margin loans and mortgages.

4 One other deduction you can make is to charity. Why help the government when you could be helping somebody needy? But the charity must be registered by the Tax Office, which all the big ones are, so a contribution to your super fund or Bottom of the Harbour Ltd won't count. But school building funds do. Like most other deductions one notable exception is subscriptions you can make your donations early so you can claim them this year and get the tax break in a matter of weeks.

5 It's the opposite for income. If you can delay a dividend or interest payment until July 1, you won't have to pay tax on it for another year. All right, so there's not much you can do about that. Still, there are two things you can time. One is a term deposit. The other is a capital gain, er sorry, loss.

Remember if you hold an asset for at least a year, the capital gain on it is halved when you sell it in effect the top rate is just under 25 per cent. Losses can be made good only against capital gains. But if you don't have any capital gains, the losses can be carried forward to be used down the track. Even if you got your AMP shares free in the demutualisation, they aren't entirely useless. The Tax Office considers they cost $10.43 a share, so anything less than this is a capital loss. If you're lucky enough to have a capital gains problem, it might pay you to sell any shares you're losing on, especially if they don't look like coming good for a while. You can always buy them back later, hopefully at an even cheaper price. The pros do this all the time and call it bed and breakfasting, but be careful. Call me a spoilsport, but selling some shares at 3.59pm on June 30 to claim a capital loss, and buying them back at 10.01am on July 1 at a higher price might look a bit suss to the Tax Office.

If you're selling units in a managed fund, by the way, don't forget to claim the entry fee.

6 Franked dividends are one of the best tax breaks around. Pity you have to buy shares to get them. Still, with share prices generally depressed, there's a good case for investing any savings into bank shares rather than deposits. That's because the banks pay generous, fully franked dividends which means you get a 30 per cent tax break on them. Even better, on tax rates below 30 per cent, the Tax Office refunds the difference.

Bank shares are yielding about 5 per cent in fully franked dividends. Taking into account the tax break, that's equivalent to an interest rate of 7 per cent. No bank savings account or term deposit comes within cooee. True, you have to pay brokerage to buy the shares , but using a discount broker will only cost about $25. The shares aren't as safe as a deposit, since they can drop in price. But unlike a deposit, there's also the potential of a capital gain. By the way, couples should buy the shares in the name of the lower earner that way you might even get a refund.

7 Speaking of income splitting, think of your spouse as a taxpayer. I know I'm just a romantic at heart, but investments should be in the name of the lower taxpaying partner so that you can take advantage of the lower tax rate. A partner who doesn't have a job, for example, can earn up to $6000 in investments and savings before tax hits. Or up to $20,000 for the 17 per cent tax rate which would give you a 13 per cent rebate on franked dividends.

8 You can also do the splits with super, one of the best tax breaks around. Before June 30, put up to $3000 into a non-working or low income partner's super fund and you'll get a rebate of $540. No, you won't have to pay the 15 per cent contributions tax if you're using after-tax money. And once it's in the fund, the earnings on that $3000 will be taxed at only 15 per cent. It's one of those rare occasions that a tax break begets another tax break. For future reference, you don't have to pay the $3000 in one lump sum either. Spread it over the year in dribs and drabs if you like.

Even if you're self-employed, which gives you a tax deduction on any contribution up to $5000, and then 75 per cent of anything on top of that, it could pay to put some of your contribution into a spouse's fund, because this brings tax benefits later, including calculating the reasonable benefits limit (don't ask, just trust me).

Mind you, there's nothing to stop you making voluntary contributions to the work super fund. This isn't popular because you don't get a tax deduction. But you don't pay the 15 per cent contributions tax, either. 9 Better still is salary sacrificing, the mother of all tax breaks. Instead of using money from your pay that has been taxed, it goes straight into your super fund before you can get your mitts on it.

It's called sacrificing because you're giving up some of your normal pay and asking your boss to put it into your super fund instead.

That way, it escapes your marginal tax rate, although it incurs the 15 per cent contribution tax. If super doesn't grab you and if you're under 40 it shouldn't you can use salary sacrificing in other ways to get a tax break.

Get your boss to give you a car, a laptop, a mobile phone, pay the child care fees or give you some company shares, because they're all FBT-free zones.

And your boss can claim back the GST as well, which should be passed on to you.

10 Finally there's the June 30 agricultural schemes. The buzz word this year is agribusiness.

If you want to throw your money away, at least make sure you get the tax deduction. Check with the Tax Office whether there's a product ruling. If there isn't, don't go near it.

Most overlooked breaks

For product rulings: www.ato.gov.au .

For a tax accountant in your area: www.cpaaustralia.com.au .

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