Meet Tony. He earns more than $1 million a year yet when it comes to tax time his taxable income is just $18,000 meaning he pays no income tax.

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How does he do it? Deductions.

Tony, who we have created based on ATO data, is one of the 676,000 Australians who moved down at least one tax bracket when filling out their tax return in 2016-17.

To do this, first they declared their total income from multiple sources, such as wages, bank interest and dividends from shares.

Then they subtracted deductions, such as work expenses and charitable donations.

The amount left was their taxable income.

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Taxable income falls into five tax brackets. You are taxed at a higher rate once you earn more than the threshold of each bracket.

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Sometimes it doesn’t need much to move down a tax bracket. If your total income was $88,000 and you made more than $1000 in deductions, you would move down to a lower tax bracket.

Because of the way Australia’s income tax system is structured, moving down one tax bracket won’t make a great deal of difference when it comes to how much tax you pay.

But sometimes people drive down their income a great deal, which greatly reduces how much tax they have to pay.

There were 70 people like Tony, who earned more than $1 million in total income, but lowered their income to less than $18,200 after deductions. That meant they didn’t have to pay any income tax.

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It is not known whether their behaviour triggered a tax audit as deductions are scrutinised by the ATO and any attempts to minimise tax must comply with tax laws.

This is one reason that Tony is in minority – 99 per cent of people who earned more than $1 million remained in the top tax bracket after deductions.

Here are some of the ways taxable income shrinks through deductions.

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As well as his four-bedroom home in a leafy suburb, Tony has an investment flat. He negatively gears the property because the cost of maintaining it along with the interest he pays on the bank loan he took out to buy the property exceeds the amount he earns in rent.

Tony has chosen to stomach this $15,000 loss because he hopes that when he sells the flat in a few years, the capital gain will outweigh the losses he has racked up during the time he rented it out.

About 9.4 per cent of taxpayers (or 1.3 million people) reported a net rental loss in 2016/17 with an average loss of $8771. People who move down a tax bracket are slightly more enthusiastic negative gearers, and on average racked up a rental loss of almost $10,500.

Among Tony’s 70-strong cohort, the average rental loss was $40,712.

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Tony’s financial smarts extend to his super.

He is making additional superannuation contributions that are taxed at 15 per cent, far lower than the typical tax rate on ordinary earnings. He put in $50,000 even though it's above the cap.

Tony won’t be able to access the additional super payments until he retires, but at 62 he doesn’t have as long to wait until he can start dipping into those funds.

He is among the nearly 5 per cent of those aged between 60 and 64 who made personal super contributions of about $26,000 on average. This compares with only 0.3 per cent of people aged between 30 and 34 who only averaged $12,500.

Among the Tonys, the average personal superannuation contribution was $557,500.

We crunch the numbers on the more than 13 million Australians who file a tax return.

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Tony spent $50,000 on managing his tax in 2016/17, far more than the typical Australian but far below the average for his cohort.

More than 40 per cent of taxpayers claim for the cost of doing their tax, which sets them back $375 on average. That covers things like tax advice from an accountant, or the software they bought to help them fill out their own returns.

But for those who manage to move tax brackets, it’s more than double that at more than $800 a year.

In Tony’s case, he had some costly dealings with the ATO that meant he had to call upon a solicitor and a barrister, whose fees added to his tax management costs.

But compared with the rest of his cohort, he's not spending as much on tax-related matters - their average costs of managing tax were a staggering $607,201.

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Tony, like most taxpayers, claims for work-related deductions, such as the times he uses his own car for work and some of the out-of-pocket expenses he racks up when he is forced to spend several nights away from home for work.

Sixty-four per cent of people made a work-related deduction, and the average amount was $2487. For people who move tax brackets, the average was $5796. Of course, some jobs are more likely to incur work-related expenses than others, particularly ones that require a lot of travel.

For Tony, the work-related deduction is $17,000. He also claims for home office costs, such as furniture and stationery.

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Any donations to registered organisations – even a $2 coin dropped in a charity appeal bucket – can be claimed as a tax deduction.

One-third of taxpayers disclosed a charitable donation in 2016/17 and the average amount they chipped in was $770.

But people who moved down a tax bracket were more likely to donate money and gave far more on average – more than $3000. People who move down a tax bracket make up about 5 per cent of taxpayers, but were responsible for 27 per cent of donations.

Tony is a big earner and a big giver. He has given $850,000, which he now claims on tax.

But Tony’s $850,000 donation pales in comparison with what some of the other million-earners who lowered their taxable income to less than $18,200 chipped in – their average donation was $7,472,326.

After making all these deductions, Tony would have been entitled to a sizeable tax refund. And 39 of his cohort had franking credits totalling $8.3 million, which averages out to a handy $213,470 each.

Check out our interactive to see how people in your job and tax bracket augment their income, as well as what they claim in tax deductions:

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This interactive shows typical income and deductions by occupation and is not intended as tax advice.