Key Tax Considerations for Businesses Ahead of EOFY 2025
Key tax considerations for businesses for 2025:
Instant Asset Write Off – Businesses that buy depreciating assets under the $20,000 immediate asset write off threshold should be to write it off completely for tax rather than depreciate it over a number of years. The asset must be first used or installed ready for use between 1 July 2024 and 30 June 2025 and is important to note this applies to small business entities with aggregated turnover of under $10m.
Prepayments – Small businesses should be able to deduct prepayments they make before 30 June. e.g. prepaid marketing or insurance.
Superannuation – You only get a deduction for superannuation once paid. Please ensure you have paid your superannuation for all staff before 30 June (usually 10 days before).
Personal superannuation – You may wish to make contributions to catch up on super under the rules that allow you to carry forward unused contributions (the current year cap for deductible contributions is $30k – it is important to note this includes employer contributions). You can carry forward any unused cap up to five years.
Important note: if you make any personal concessional contributions, for them to be an allowable deduction a notice of intent to claim form must be submitted with the superfund before lodgment of the tax return or end of the following financial year, whichever is earliest.
Writing off stock and bad debts – Clients should perform stocktake as close to year end as possible and review accounts receivables. This can help identify if there is any stock deemed obsolete or any debts may be bad that could look to be written off at 30 June.
Changes to personal income tax rates – The tax brackets changed 1 July 2024, with the middle tax bracket reducing to 30.0% (plus Medicare levy) and upper threshold increasing to $135,000. This can provide scope for additional income to be distributed from business entities to further utilise the widening and lowering of this tax bracket.
Distributing to family members – If the business is run through a trust or a trust with distributable taxable income is within your group. In recent years the ATO has narrowed its interpretation of trust distributions, specifically reimbursement arrangements so careful consideration is required when we are planning trust distributions
Company tax rates – For companies turning over less the $50m, the company tax rate this year is again 25%. This rate is the same in the 2026 financial year so there are no considerations required around changing rates and the timing of expenditure specifically for this purpose.
Cash versus Accrual – Generally through simpler business structures that have simpler business activity, such as sole traders or partnerships, there may be potential to account for your trading income on a cash basis as opposed to accrual (when you receive money rather than when you invoice)
Each client will have their own considerations and structures, the above is a general guide only and not personal advice. If required please seek tailored advice for your specific situation before 30 June.
