Tax Planning
Your EOFY Tax Checklist
The weeks before 30 June are the only time some of these decisions are still available to you. Here's what's worth doing.
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Key Takeaways
- Act before 30 June: several deductions, including the instant asset write-off, depend on the asset being installed and ready for use by year end, not merely ordered.
- Stay compliant: claiming valid deductions like bad debts is worthwhile, but so is avoiding common audit triggers such as personal use of business assets.
- Plan for what's changing: the 12% Superannuation Guarantee and the ongoing Paid Parental Leave increases both affect your budget.
Your essential ATO to-do list
The end of the financial year (EOFY) is a critical time for tax planning. A proactive approach can significantly improve your cash flow and put your business on a stronger footing for the year ahead. Here is the checklist of tax-planning tasks worth working through before 30 June.
1. Upgrade assets with the instant asset write-off
The $20,000 instant asset write-off applied through the 2025-26 financial year. The threshold is legislated to drop to $1,000 from 1 July 2026 unless it is extended again in the budget, so check the current threshold before you commit to a purchase.
- Who is eligible? Businesses with an aggregated annual turnover of less than $10 million.
- What can you claim? An immediate deduction for eligible assets (both new and second-hand) that cost less than the threshold each.
- What's the deadline? The asset must be installed and ready for use by 30 June, not simply ordered or paid for.
You shouldn't buy assets purely for a tax deduction, spending a dollar to save 25 cents is still spending a dollar. But if you were already planning to upgrade equipment, the timing is worth getting right.
2. Prepay expenses to bring a deduction forward
Small businesses can often claim an immediate deduction for prepaid expenses. This brings a deduction into the current financial year, reducing your tax bill now. Common examples include prepaying business insurance, rent, or annual software subscriptions. To be eligible under the '12-month rule', the service period you are paying for must be no more than 12 months and must end in the next financial year.
3. Write off genuinely bad debts
You can claim a deduction for income you've earned but are certain you cannot recover. Before 30 June, review your outstanding customer accounts. To claim the deduction you must be able to show the debt is genuinely unrecoverable, and you must formally write it off in your accounting system before the end of the financial year, not after.
4. Know the ATO's focus areas
The ATO consistently scrutinises a few areas that catch small businesses out:
- Personal use of business funds: company money is not personal money. Funds taken from a company must be properly recorded as a wage, a dividend, or a formal loan.
- Non-commercial losses: you can only deduct losses from a business activity against other income (like a salary) if you meet one of the ATO's commerciality tests. Losses from a hobby can't be claimed.
- Past claims: the ATO continues to review claims from previous years, so it's worth making sure your earlier returns hold up.
5. Prepare for what's changing
- Paid Parental Leave: the government scheme rose to 24 weeks from 1 July 2025 and increases again to 26 weeks from 1 July 2026 for eligible children.
- Super on parental leave: for those receiving that leave, the Government (not the employer) pays superannuation directly to the individual's super fund.
- Superannuation Guarantee: the SG rate is 12% from 1 July 2025, the final step in the legislated increases.
Most of this is straightforward once someone has walked you through it. The expensive part is finding out in October what you should have done in June.
Sources
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