As the 30 June deadline approaches, now is the perfect time for businesses to get their finances in order and take advantage of key tax planning strategies. Whether you’re a sole trader, company, or trust, proactive year-end planning can help reduce your tax liability, improve cash flow, and ensure compliance with ATO requirements.
This guide outlines practical, up-to-date strategies to consider before the financial year closes — from maximising deductions and managing super contributions to reviewing trust distributions and capital gains. Use it as a checklist to make informed decisions and set your business up for a stronger year ahead.
1. Review and Maximise Deductions
- Prepay Expenses: Eligible small businesses (turnover under $50 million) can prepay up to 12 months of expenses (e.g. rent, insurance, subscriptions) and claim the deduction this financial year.
- Write Off Bad Debts: Ensure bad debts are genuinely unrecoverable and written off in your books before 30 June to claim a deduction.
- Stock Valuation: Conduct a stocktake and write down obsolete or slow-moving stock to its net realisable value.
- Review Depreciation: Ensure you’ve correctly claimed depreciation on capital assets. The temporary full expensing incentive has ended, but instant asset write-off rules may still apply for eligible assets (up to $20,000 for small businesses as proposed in Budget 2024–25).
2. Superannuation Contributions
- Pay Employee Super On Time: Ensure all June quarter super contributions are paid by 30 June to claim a deduction this year (payments must reach the fund — not just be processed).
- Make Personal Contributions (if applicable): For directors/shareholders who are also employees, consider making additional deductible super contributions within the $27,500 concessional cap.
3. Review Timing of Income
- Defer Income (if appropriate): If you operate on a cash basis, consider deferring the receipt of income until after 30 June (legally and commercially appropriate).
- Invoice Management: For accrual-basis businesses, defer issuing invoices or delay work if the income would otherwise be taxed in this year.
4. Trust Distributions and Resolutions
- Prepare Trust Resolutions Before 30 June: For discretionary trusts, resolutions on how income is to be distributed must be made before year-end to avoid default tax outcomes.
- Review Section 100A Risks: Ensure trust distributions to adult children or non-working beneficiaries comply with ATO guidance and aren’t considered reimbursement arrangements.
5. Utilise Tax Losses and Offsets
- Group Losses: Check if losses can be grouped across entities (subject to continuity and same-business tests).
- Small Business Income Tax Offset: For sole traders and partnerships, ensure you qualify for the 16% offset (up to $1,000) on business income.
6. Capital Gains Tax (CGT) Planning
- Offset Gains with Losses: Consider selling underperforming assets to crystallise a loss that can offset gains.
- CGT Concessions for Small Business: Review eligibility for the 15-year exemption, 50% active asset reduction, retirement exemption, or rollover.
7. Fringe Benefits Tax (FBT) and Vehicle Logs
- Update Logbooks: Ensure vehicle logbooks are current and accurate to claim correct deductions and manage FBT.
- Minimise FBT Exposure: Consider replacing fringe benefits with cash salary or exempt items (e.g. work-related devices).
8. Recordkeeping and Reconciliations
- Reconcile:
- BAS and PAYG instalments
- Bank accounts and loans
- Payroll (STP finalisation must be completed by 14 July)
- Ensure all documentation (invoices, contracts, receipts) is complete and compliant.
Final Tips
- Consult a Tax Advisor: Tax planning is highly individual. A registered tax agent or accountant can tailor strategies to your structure.
- Plan for Changes in 2025–26: Be aware of upcoming tax law changes from the Federal Budget or new ATO compliance programs.