As the end of the financial year approaches, taking proactive steps in your tax planning is essential to optimise your position and potentially minimise your tax liabilities. Here are some key strategies for small businesses to consider as we head towards 30 June:
Income Management:
- Consider Deferring Invoicing: Where legally possible and subject to the terms of any contracts or other agreements, think about postponing issuing invoices for income until after 1 July 2025 to potentially defer taxable revenue to the next financial year.
- Review Income Timing: Assess the timing of your income sources as some income types are only assessable upon receipt.
Expense Management:
- Pre-Pay Deductible Expenses: Explore the possibility of bringing forward or pre-paying deductible expenses where permitted that are scheduled for the months following 30 June 2025.
- Spousal Payments: If applicable and if they are commercial, consider paying wages or contractor fees to a spouse for genuine administrative support, ensuring these are tax-deductible for the business.
- Asset Purchases (Under Threshold): Be mindful of any immediate asset write-off thresholds that may be in place and consider any eligible purchases before 30 June 2025. The current limit is $20,000 excluding GST for eligible assets up to 30 June 2025, and whilst there is a government proposal to extend this until 30 June 2026 in the 2025/26 Budget, this is yet to be confirmed.
- Charitable Contributions: Remember that contributions to eligible charitable organisations (that are deductible gift recipients registered) before EOFY can provide tax benefits and ensure that they are receipted by that organisation in the name of the individual where the claim will give the greatest tax benefit.
- Vehicle Usage: Ensure you are maintaining accurate logbooks for all business-related vehicle usage. A new logbook is required every 5 years or when your usage changes significantly.
- Stock & Stocktakes – Ensure that you have undertaken a complete stock take of your inventory to ensure that stock is not overstated, and obsolete or damaged stock is adjusted for.
- ATO Interest – The Treasury has recently passed that General Interest Charges and Shortfall Interest Charge imposed by the ATO, will not be deductible from 1 July 2025. Accordingly, this can detrimentally impact clients with outstanding income tax, and integrated client debts resulting in interest imposed and payable that is no longer deductible.
General Business Considerations:
- Business Structure: Regularly evaluate if your current business structure remains the most tax-effective for your circumstances. The company tax rate for eligible small businesses is currently 25%.
- Trust Distributions: If you operate through a trust, ensure all trust distribution minutes are documented and finalised by 30 June 2025 to avoid the risk that the trust income is taxed at the top marginal tax rate.
Managing Staff:
- Superannuation Contributions: Ensure superannuation contributions for the June quarter are paid on time to be deductible in the current financial year. Payments generally need to be received by the super fund by 30 June 2025, so we recommend that the payments are made to the fund (via the clearing house or other mechanism) by no later than 20 June 2025 to give time for the funds to clear.
- Staff Bonuses: If you plan to pay staff bonuses, process them in the payroll system before 30 June 2025 for tax deductibility.
Superannuation (Individual/Business Owners):
- Voluntary Contributions: If you’re considering making voluntary superannuation contributions, be mindful of contribution caps and deadlines. Also be mindful that, like staff superannuation contributions above, the funds receive the money and is cleared funds prior to 30 June 2025. Please note that the Concessional Contributions Cap for the 2025 financial year is $30,000 (deductible superannuation), and you should check with your advisor as to what has been contributed to date, or if you have any carry forward unused contribution caps to be utilised.
Capital Events:
- Asset Sales and Capital Gains: Careful consideration should be made around capital gains, and whether any discounts, or reductions can be applied. This should be considered before or at the time of the event. If this has not happened, then it is not too late. There can be strategies utilised that reduce the taxation on this event and benefit you now and into the future.
We understand the importance of tax planning in achieving financial stability. Our experienced advisers are here to assist you in navigating the complexities of tax laws, identifying opportunities to reduce your tax liability and maximising incentives tailored to your business needs. Get in touch to learn more about how proactive tax planning can benefit your business.
The information (including taxation) contained on this website is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. DLA Partners strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances.