As the end of the financial year approaches, businesses across Australia should be turning their attention to tax planning. Strategic tax planning can help minimise your tax liabilities and optimise cash flow. With the Australian Taxation Office (ATO) continuing to tighten compliance, it is more important than ever to ensure your business is not only tax-efficient but also fully compliant.
Here are some practical and timely strategies business owners should consider in the lead-up to 30 June 2025.
Maximise Deductions and Prepay Expenses
Business with a turnover below $50m can claim an immediate deduction for prepaid expenses that relate to services provided within 12 months. Consider prepaying expenses such as rent, insurance professional subscriptions or loan interest before 30 June to bring the deduction into 2025.
Expenses for services provided before 30 June may still be deductible even if an invoice has not been received (or paid). Where there is present existing liability, a deduction can be claimed. This may include such costs as legal fees and salary and wages (including bonuses if confirmed by year end).
Take Advantage of the Instant Asset Write-Off
Businesses with an aggregated turnover less than $10m can claim an immediate deduction for the business use portion of an eligible depreciating asset costing less than $20,000. A deduction can be claimed for each eligible asset costing less than $20,000.
Be sure to:
- Ensure the asset is used or ready for use by 30 June 2025.
- Keep proper records, including invoices and evidence of installation.
Defer Income Where Appropriate
If your business cash flow allows, deferring some income until after 30 June can reduce your taxable income for the current year. Any deferral must be commercially justifiable and consistent with general accounting standards and principles.
Review and Write Off Bad Debts
If you have outstanding invoices that are unlikely to be paid, now is the time to assess whether they can be written off as bad debts. To claim a deduction, the debt must be:
- Included as assessable income in the current or a previous year, and
- Written off in your accounts before 30 June 2025.
If you have accounted for GST on these sales, you may also be entitled to a GST adjustment.
Prepare documentation (such as meeting minutes) documenting the debts to be written off.
Pay Superannuation Before Year End
To claim a deduction for employee superannuation contributions, payments must be received by the super fund no later than 30 June. If you use a clearing house (like the ATO’s Small Business Super Clearing House), make payments well in advance to ensure they are processed before 30 June.
Inventory and Asset Review
If you carry inventory, consider conducting a stocktake before the end of June so you have an accurate list of inventory at year end. Review your listing and write-off any obsolete or worthless stock.
Tax law permits businesses to value stock using cost, market selling value or replacement cost. Most businesses value stock at cost but you may want to consider one of the other methods if it gives you a more favourable outcome.
Similarly, review your fixed asset register for any items no longer in use and consider writing them off.
ATO Interest Charges
From 1 July 2025, General Interest Charges (GIC) and Shortfall Interest Charges (SIC) imposed by the ATO will no longer be tax deductible. The current GIC rate is currently above 11%.
If you have outstanding ATO debts, consider paying these before 30 June 2025.
Effective tax planning is about being proactive. Tax planning opportunities are available but early action is critical to obtaining maximum benefit. With 30 June 2025 fast approaching, now is the perfect time to commence your planning.
Contact your Accru advisor for expert guidance on navigating strategies to minimise your tax while remaining compliant with tax legislation.
