EOFY Tax Planning tips for businesses

Optimising your business structure – finding the structure(s) that best fit your business

Optimising your business structure is crucial for ensuring efficiency, scalability, and compliance. 

By selecting the right structure, whether it’s a sole proprietorship, partnership, company, or trust, you can better manage your tax obligations, protect your assets, and streamline operations. Each structure has its unique advantages and potential drawbacks, making it essential to evaluate which one aligns best with your business goals and circumstances. 

For tailored advice and to explore the options that best fit your business, contact your RSM adviser who can provide expert guidance and support.

Paying superannuation on time and before year-end 

Most businesses have payroll software that enables posting payroll expenses into the general ledger by the click of a button. 
Employees are paid their net wage, but the superannuation contributions may be left in an unpaid superannuation account until the end of the month or quarter. While most expenses are eligible for deduction when incurred, superannuation is only deductible when it is paid and received, on time, by a complying superannuation fund. Superannuation contributions need to be received by the fund by the 28th day of the month following each quarter (with significant penalties for late payment). 

The June quarter superannuation liability is due by 28 July. Making payment before 30 June will allow your business to receive this tax deduction for the 2026 financial year, instead of the following year. Please note the superannuation payment will need to be cleared and in the fund by 30 June 2026, therefore ensure the payment is made with enough time to clear.

Preparing for Payday Super – Superannuation Reform from 1 July 2026 

From 1 July 2026, employers must pay Superannuation Guarantee (SG) contributions at the same time as wages. Contributions must be received by the employee’s super fund within 7 calendar days of payday. 
Employers may be granted extended due dates for super contributions in specific situations. These include: 

• First contribution for a new employee or when contributing to a new super fund for an existing employee
• Out-of-cycle payments
• Exceptional circumstances affecting multiple employers.

Super contributions and charges will be calculated on “Qualifying Earnings” (QE) instead of just Ordinary Time Earnings (OTE). QE is a broader term that includes OTE plus other amounts that form part of salary and wages for SG purposes. For example, salary sacrifice amounts and all commissions are included in QE from 1 July 2026. 

Key actions for employers: 

• Update payroll systems to calculate SG on “Qualifying Earnings” (QE) and report via STP.
• Transition away from the ATO’s Small Business Superannuation Clearing House (SBSCH), which closes 30 June 2026.
• Begin testing systems early and consider voluntary adoption before the deadline.
• Review the ATO’s Payday Super checklist and resources. 

Penalties for non-compliance include: 

• Super Guarantee Charge (SGC), which consists of the unpaid super amount calculated on Qualifying Earnings (QE), daily compounding interest at the general interest charge (GIC) rate, and an administrative uplift of up to 60%, depending on the employer’s compliance history and whether they voluntarily disclose the shortfall.
• Additional penalties of up to 50% of the unpaid SGC may apply if the employer fails to pay the assessed SG charge within 28 days of the ATO’s notice of assessment. 

Moving to payday-based super payments requires employers to adjust their payroll processes and cash flow management. Instead of setting aside super each payday and holding it until the quarterly due date, businesses will have to remit those amounts to funds almost immediately. This could impact cash flow, so advance planning is essential.

Instant asset write off 

The Australian Government extended the $20,000 instant asset write-off limit for an additional year, covering assets first used or installed between 1 July 2025 and 30 June 2026. 

This means eligible small businesses can immediately deduct the full cost of each eligible depreciating asset costing less than $20,000 (exclusive of GST) that is first used or installed in that period. 

To access the instant asset write-off, you must be an eligible small business entity. The turnover threshold for using the simplified depreciation rules, including IAWO, is aggregated annual turnover under $10 million. 

Any asset costing $20,000 or more (i.e. at or above the threshold) is not eligible for an immediate write-off in 2025–26. Such assets should be added to the small business general depreciation pool and depreciated at the standard rates: 15% in the first year (regardless of purchase timing) and 30% each year thereafter. 

Under the extended law, if you’re using the simplified depreciation rules, you can write off the entire balance of your small business pool at the end of the 2025–26 income year provided the closing balance is less than $20,000. 

The instant asset write-off limit will drop back to $1,000 from 1 July 2026.

Scrapping/disposing of plant and equipment before year-end 

Businesses should review their fixed asset registers to ensure that they are not holding plant or equipment that they no longer require due to obsolescence. Even checking for assets that your business no longer holds could save you at tax time.
Depending on the written down value of the assets, a deduction can be claimed should the asset be ‘scrapped’ or disposed of prior to year-end.

Valuing closing stock at lowest value

It may be time to review how your business values stock on hand. 

Perhaps the value of closing stock used for tax purposes is based on your management accounts that uses the higher of net realisable value or cost. The ATO allows a business to value its closing stock at any of the following values: 

• Replacement value
• Cost
• Market selling value 

Depending on the stock valuation under these three methods a business can obtain a significant reduction in its tax liability by adopting a method that results in the lowest value.

In certain circumstances, a taxpayer may also be entitled to a deduction for a write-down of obsolete stock where appropriate valuations and measures are taken. 

NOTE: Application of methods can differ for different inventory items. Liaise with your RSM Advisor to determine most suitable options for your business.

Committing to staff bonuses before year-end 

It is common practice for a business to create a provision for payment of staff bonuses. 

However, a tax deduction is only available for staff bonuses to the extent that the business is ‘definitively committed’ to paying the bonus. Therefore, a business looking to claim a deduction for current year bonuses should keep appropriate documentation to support approval of those bonuses prior to year-end. 

Prepaying expenditure eligible for immediate deduction 

Review any of your expenditure that is eligible for a discount if paid for the next year. 

Not only can you take advantage of this saving but depending on the expenditure it can also result in an immediate tax deduction. Since 1 July 2020, businesses with a turnover of less than $50 million are eligible to deduct any prepayment that has a service period of less than 12 months and all businesses can deduct prepayments that are either required under a Government law or cost less than $1,000. 

Accruing expenses paid after year-end 

Just because you haven’t paid for goods or services until the following tax year, doesn’t mean you can’t take advantage of the deduction this year. 

To the extent that services are provided to you before year-end even though they are invoiced after year-end, and the cost can be reasonably estimated, the expenditure may be deductible in the year in which the service was provided. 

Deducting ‘consumables’ contained within closing stock 

If your business holds consumable stores or spare parts that are to be used within three months after year-end, the ATO’s view is that businesses can deduct the costs of consumables in the year acquired, as opposed to having to include the amount in closing stock. 

It can be beneficial for businesses to review their consumables and claim upfront where possible.

Immediate deductibility of start-up costs 

If you started your small business during the current year (or will do before year-end), the costs associated with starting the business will be deductible (e.g. accounting fees, legal costs, company incorporation costs and trust deed costs.

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