As the end of the financial year approaches, tax planning is critical for small businesses. Acting before 30 June can help reduce tax liabilities, improve cash flow, and ensure key deductions aren’t missed. By paying superannuation before 30 June, bringing forward any deductions and writing off obsolete or damaged stock business owners can avoid unnecessary tax and improve cash flow management.
Maximise Deductions
To maximise deductions before 30 June, business owners should review all eligible expenses to ensure nothing is missed. Where cash flow allows, consider prepaying expenses such as rent, insurance, or subscriptions for up to 12 months to bring forward deductions, as you can save on taxed by doing this. Lastly, look at any bad debts that are unlikely to be recovered, these should be written off before year end to ensure they are deductible.
Manage Stock and Fixed Assets
Effective inventory management is crucial for businesses that deal with stock. Before the end of the financial year businesses should take the opportunity to review inventory and make necessary adjustments of obsolete or damaged stock from conducting a stock take.
The same process should be applied to asset registers, as this helps ensure records are accurate, assets that are no longer in use are written off, and depreciation claims are correctly calculated for tax purposes.
Superannuation Contributions
To claim a tax deduction for superannuation contributions, the expense must be both incurred and paid in the same financial year. While the June quarter superannuation deadline is in July, any super paid after 30 June, even if paid on time will not be deductible in the current tax year. To avoid losing the deduction, ensure all employee and personal super contributions are paid and received by the fund before 30 June.
Trust and Company Structure Planning
Effective trust and company structure planning before year end can help manage tax outcomes and avoid unintended consequences. For trusts, ensure trustee resolutions outlining income distributions are prepared, signed, and dated before 30 June to prevent income being taxed at the top marginal rate (47%).
Company owners should also consider whether paying dividends is appropriate and review any Division 7A loans to ensure they are correctly managed or addressed before the end of the financial year.
Payroll and Employee Obligations
Before year end, it’s important to review payroll and employee obligations to ensure compliance and avoid unnecessary costs. Employers must finalise Single Touch Payroll (STP) reporting for all employees by 14 July.
Superannuation Guarantee Charge (SGC) obligations should also be followed closely, failing to pay superannuation on time results in the SGC, where the super, interest, and administration fees are all non-deductible, significantly increasing the real cost to the business. In addition, you may be required to pay super on overtime earnings
Businesses should also review their payroll tax position. In Queensland, payroll tax applies once total Australian wages exceed $1.3 million per year. Importantly, grouped entities are assessed together, meaning wages across related businesses are combined and can trigger payroll tax registration and liabilities sooner than expected.
Take Advantage of Small Business Concessions
For the 2026 income tax year, the instant asset write-off limit is $20,000. Assets that do not qualify for the instant write-off can be allocated to the small business pool, with a 15% deduction in the first year and 30% in subsequent years. If the pool balance falls below the $20,000 threshold at year end, businesses can write off the entire amount, allowing continued tax benefits even with the lower limit.
Small businesses should confirm their eligibility as a Small Business Entity to access these concessions and review their options under the simplified depreciation rules to optimise tax outcomes before the end of the financial year.
Plan for Asset Sales and Capital Gains
Before 30 June, businesses should consider the tax implications of any asset sales, as the timing of a sale can directly affect capital gains tax liabilities. Planning the sale of assets strategically may help manage tax outcomes and take advantage of available concessions.
Timely tax planning is essential for small businesses to maximise deductions, manage liabilities, and make the most of available tax concessions before 30 June. Acting now can help avoid missed opportunities and unnecessary costs, contact our firm for tailored end of financial year advice and strategies designed to optimise your tax position.
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