As this is my last article before the 2026 Financial Year, below is a reminder of tax planning tips and actions that you need to take before 30 June.
For small businesses looking to obtain a tax deduction for the 2025 year, it is important that any business items are incurred by 30 June. Incurring a debt means an event or transaction has taken place for which there is an obligation for you to pay. It does not necessarily mean that a payment needs to be made by 30 June. Furthermore, you can prepay expenses such as interest and rent for a period not exceeding 12 months and claim a tax deduction when the prepayment is made.
Some of you may have customers that unfortunately have not paid you and it is unlikely that these will be recovered, even though you have made reasonable attempts to recover the debt. You should consider writing these off as bad debts, as it will result in a tax deduction if you have previously declared this as income in a prior year.
For asset purchases, items must be installed and ready for use by 30 June 2025, thus allowing a full claim for low value assets and a 15% claim for assets costing $20,000 or more.
For primary producers, Farm Management Deposits can be an effective way to manage fluctuating incomes. If you are wishing to make a deposit this financial year, please contact your bank to ensure any deposit is made before their deadline.
For superannuation contributions, it is important to note that to claim a super deduction this year, it must be received by the fund, not when the payment is made. If you are making contributions on behalf of employees, check with your clearing house to ensure the payment is made on time.
If you control a discretionary trust, ensure that you have made and signed a resolution determining how the net income will be distributed for the 2025 year. Your trust deed will spell out how you determine the net income and by when it must be done.
If you control a private company and you have borrowed funds from the company, known as a Division 7A loan, you must ensure that appropriate principal and interest repayments are made by 30 June.
There is still time to talk to your accountant to discuss your personal situation.