Small business tax planning to do before 30 June 2025

Why This Year is Different

The ATO isn’t mucking around in 2025. They’ve been handed nearly $1 billion in extra funding to chase compliance, which means they’re watching small business more closely than ever. But here’s the thing – if you’re doing things properly, this actually works in your favour. The businesses that get into trouble are the ones cutting corners or ignoring the rules.

The Big Wins for Small Business in 2025

1. The $20,000 Instant Write-Off (Still Going!)

Good news first – the instant asset write-off is still $20,000 until 30 June 2025. After that, it drops back to a measly $1,000, so this is genuinely your last chance to make the most of it.

Here’s how it works:

• Your business needs to turn over less than $10 million per year
• The asset has to cost less than $20,000 (not including GST if you can claim it back)
• You need to start using it before 30 June 2025

What counts:

• Computers, tablets, and software
• Office furniture and equipment
• Tools and machinery for trades
• Utes and work vehicles under $20k
• Even things like fridges for your staff room

The catch: Delivery times are getting sketchy as we get closer to June. If you’re thinking about it, order it now.

2. Pay Next Year’s Bills Early (The 12-Month Rule)

This is a simple one that too many businesses miss. You can prepay expenses now and claim them this year, as long as the benefit lasts no more than 12 months.

What you can prepay:

• Insurance premiums (business insurance, public liability, etc.)
• Software subscriptions (MYOB, Xero, Office 365)
• Professional memberships and subscriptions
• Lease payments on equipment
• Advertising campaigns that start before next June

Real example: Pay your $3,000 business insurance premium on 29 June for the next 12 months. You get the full deduction this year, which could save you $750-$900 in tax depending on your situation.

3. Super Rate Going Up (Get Ready)

Here’s something that’ll hit your cash flow – the super guarantee rate jumps from 11.5% to 12% on 1 July 2025.

What this means:

• Any wages you pay from 1 July onwards get the 12% rate, even if it’s for work done in June
• Make sure your payroll system is updated
• The ATO wants the March quarter super paid by 28 April – don’t be late

Pro tip: If you’re behind on super, catch up now. The ATO is getting tougher on super guarantee, and the new payday super rules coming in 2026 will make late payments much more expensive.

4. Stock and Bad Debts – Clean House Before June

This is particularly relevant for Albury-Wodonga businesses that might have been hit by seasonal changes or supply chain issues.

Obsolete or damaged stock:

• Write it down to what it’s actually worth (or zero if it’s genuinely worthless)
• Get an independent valuation if the amounts are significant
• Document the decision with photos if needed

Bad debts you need to write off:

• That customer who went broke six months ago
• Invoices you know you’ll never collect
• Just make sure you actually included the income when you invoiced them

How to do it properly:

• Write a note explaining why the debt is bad
• Update your debtors list
• Do it before 30 June to claim it this year

This isn’t about being aggressive – it’s about being realistic. Carrying dead stock and hopeless debts on your books doesn’t help anyone.

Company-Specific Strategies

Dividend Planning

• Consider paying franked dividends before 30 June to utilise franking credits
• Ensure sufficient profits and franking credits are available
• Remember: dividends must be declared and paid before year-end

Director Fees and Bonuses

For companies, consider:

• Accruing director fees (with proper board resolution)
• Employee bonuses declared before 30 June
• Ensure payments are made within reasonable time

Trust Distribution Strategies

Critical Deadline: 30 June 2025

Trustee resolutions for income distributions must be made by 30 June at the latest.

Key Considerations:

• Review trust deed requirements
• Consider income and capital distribution options
• Check family trust elections and interposed entity elections
• Avoid distributions outside the family group (47% penalty tax applies)

Family Trust Distribution Tax (FTDT) Warning: Distributions outside the specified family group attract FTDT at 47% with no Commissioner discretion to waive.

What the ATO is Actually Watching in 2025

The ATO has been pretty open about what they’re focusing on this year. Here are the areas where they’re being extra picky:

“Wild” Work-Related Expense Claims

Some of the ridiculous claims they’ve knocked back recently:

• A mechanic trying to claim a gaming console and air fryer as “work-related”
• A truckie claiming swimwear because it was hot during his delivery runs
• A fashion manager claiming $10,000+ in designer clothing for “work events”

The safe approach: If you can’t draw a clear line between the expense and earning your income, don’t claim it.

Working from Home Claims

With so many people still working from home post-COVID, the ATO is paying close attention here:

Fixed rate method (70c per hour):

• Covers electricity, internet, phone, and basic supplies
• You MUST keep records of actual hours worked (estimates don’t count)
• Simple but you need to be accurate

Actual cost method:

• Claim the work-related portion of your actual expenses
• Higher potential claims but way more paperwork
• Need receipts for everything

Small Business Red Flags

The ATO is particularly watching:

• Contractors not declaring all their income (especially cash jobs)
• Businesses claiming personal expenses as business costs
• GST registration issues for ride-share and delivery drivers
• Non-commercial business losses (hobby businesses claiming big deductions)

Professional Services and Gig Economy

Professional Firms Under Scrutiny

The ATO is focusing on:

• Incorrect distribution reporting from partnerships and service trusts
• Inappropriate income alienation arrangements
• Personal services income (PSI) compliance

Sharing Economy Income

Must Declare All Income From:

• Airbnb and short-term accommodation
• Uber and ride-sharing services
• YouTube and content creation
• Online marketplace sales

Remember: Platforms are required to report transactions to the ATO, so ensure all income is declared.

Your Next Steps Before 30 June

This week:

• Review what equipment or software you actually need (remember the $20,000 write-off ends soon)
• Check if you can prepay any bills for next year
• Look at your debtors list – anything that needs writing off?

Before 30 June:

• Make sure March quarter super is paid
• Update payroll for the new 12% super rate from July
• Document any stock write-downs or bad debt decisions
• Book a tax planning chat if you haven’t already

Don’t Try This at Home

Look, we get it – tax can seem pretty straightforward until it isn’t. The ATO’s new compliance focus means the cost of getting it wrong is higher than ever. A $500 investment in proper advice could easily save you $5,000 in tax, not to mention the sleep you’ll lose if you get it wrong.

Ready to make sure you’re not leaving money on the table?

These strategies work, but they need to be applied to your specific situation. Every business is different, and what works for your mate’s business might not work for yours.

Book your tax planning session