A few well-timed nudges
Tax planning tips for growth focused business owners - before June 30 rolls around.
Structural matters:
Do you have a Family Trust in your group structure? Make sure the money actually moves
If you're distributing trust income to beneficiaries (particularly adult children and "bucket companies"), the tax office wants to see the beneficiary genuinely benefiting from the distribution - not just a paper entry, especially where the funds are used by others. Cash is king here. Where possible, distributions should be paid to beneficiaries rather than building up unpaid entitlement accounts (UPEs), unless there is a clear, known payout plan for a future period.
This has been a focus area for the tax office of late and in fact, from the 2027 financial year, Trusts will be required to report even more information to the tax office - including details of UPEs for beneficiaries. This gives the Tax Office even more data points to work with.
Now is the time to get your house in order: make sure all distribution arrangements are fully documented and signed, that any expenses paid on behalf of beneficiaries are paid directly from the Trust's bank account, and that cash is genuinely flowing to where it should be. Talk to your client manager before June 30 if you're not sure where you stand.
Have you paid yourself?
The tax office has significantly increased its attention on arrangements that divert income to associates, family members, or related entities - particularly in professional services. What started as scrutiny of larger firms is increasingly flowing down to smaller operators.
Of particular interest is the commerciality of wages being paid to owners (or lack thereof). Ask yourself, if you had to pay an arm’s length employee to do what you / your spouse does – what would it be?
Now is a good time to review whether wages paid to family members reflect the work actually performed, and whether your overall structure holds up to scrutiny. If you're unsure, talk to your client manager before June 30.
Business Matters:
Buy now
For business with aggregated turnover <$10M, take advantage of the instant asset write-off for purchases of deprecating assets up to $20,000 before 30 June. As it stands, after 1 July 26, the write-off level drops down to $1,000. To qualify, the asset must be installed and ready for use pre 30 June.
Review your asset register
Look over your asset register and write off anything that's been scrapped, lost, stolen, or destroyed during the year - deductions that often get overlooked.
Write off bad debts
Have a delinquent debtor? If you know you’ll never get paid, write it off before June 30 to get the deduction - the book entries need to be processed before June 30, not when the accounts are finalised. If you're on the accruals method for GST, you can also claim back any GST remitted on the original invoice on your next BAS.
Bonuses - formalise them before June 30
If you're planning to pay staff bonuses, the deduction only lands in this financial year if the amount is determined and documented in writing before 30 June. It can't be subject to later review or discretion.
Pay your June quarter super before June 30
Payment of June quarter’s super isn't due until 28 July, but if you pay it before June 30 you pull the deduction into this financial year. Note this may increase the risk of exceeding the concessional contribution cap for high income earners.
Payday super starts 1 July - is your payroll ready?
For some, that’s significant cash flow shift. To ensure you’re ready: confirm your payroll software is STP Phase 2 compliant, calculate what your pay-run super liability looks like, and plug that into your cash flow forecasting. Don't wait until the first July pay run to discover a problem - check out Hilary's recent article for the full details.
Personal matters:
Manage your capital gains - defer or offset
If you're sitting on an asset you're thinking of selling, the agreement date is what matters for CGT - signing after July 1 defers the gain a full year. If you've already realised a gain this year, consider selling underperforming assets before June 30 to crystallise a loss to offset the gain. Both moves are simple in principle, but the timing has to be right.
Catch-up super contributions
If you have made a capital gain, or had larger income distributions - one way to shelter tax on those profits is to make a catch-up super contribution. If your super balance is under $500,000 and you haven't maxed out your concessional contributions in the last 5 years, you can catch up those unused contribution now in one hit – meaning you could put more into super than the usual $30,000 tax deductible limit.
Check your MyGov super history and chat with your client manager before June 30 to discuss how this could benefit you.
Get your records in order
In a high-cost environment, there's real money sitting in properly documented deductions - but only if the paperwork is there to support them. Make sure vehicle logbooks are current and odometer readings are recorded at June 30 [download the template here]. If you work from home, WFH diaries need to be maintained [use our template here]. Keep receipts for everything - the Tax Office doesn't take your word for it.
We'll be reaching out to clients progressively in the lead up to 30 June to make sure things are moving in the right direction.
Not a client but feel like you could use a nudge? Feel free to contact us to chat about your situation.