As we approach 30 June 2025, now is the time to review your tax position and take advantage of available concessions. Here are six key strategies small businesses can consider to optimise their tax outcomes:
1. Instant asset write-off
If you operate a small business with an aggregated turnover of less than $10 million, you may be eligible to claim an immediate deduction for the business-use portion of the cost of eligible assets. This applies to assets costing less than $20,000 and is currently available up to 30 June 2025. Eligible assets can include machinery, computers, equipment, and motor vehicles, whether new or second-hand.
Before the last federal election, the Labor government committed to extending the $20,000 instant asset write-off to 30 June 2026. However, this has not yet been legislated, and there remains a possibility that the threshold could revert to $1,000.
Tip: The instant asset write-off can be a useful way to reduce taxable income, but should be used strategically. Only purchase assets your business genuinely needs. Preserving cash flow is often more valuable than spending for tax savings alone.
2. Prepay expenses
Small businesses can claim an immediate deduction for certain prepaid expenses, such as rent, insurance, and subscriptions. Normally, prepaid expenses covering 12 months or more must be spread over the relevant period, but this concession allows you to deduct them in full upfront.
This rule is more widely available, with a higher aggregated turnover threshold of $50 million, compared to the $10 million threshold for the instant asset write-off.
3. Review stock valuation and identify obsolete stock
Under tax law, trading stock can be valued using one of three methods:
- Cost – The original purchase or production cost of the stock.
- Market Selling Value – What you could reasonably expect to sell the item for
- Replacement Value – The cost to replace the item as at 30 June 2025
Choosing market selling or replacement value can often result in a lower closing stock value, thereby reducing your taxable income.
Tip: If you hold stock for long periods, consider arranging an independent valuation at year-end. Also, review for obsolete or slow-moving stock that may be written down or written off entirely.
4. Write off bad debts
Now is the time to review your accounts receivable. If any debts are deemed unrecoverable, writing them off before 30 June 2025 can give rise to a tax deduction.
5. Pay super before the year-end
Superannuation contributions are only deductible when paid, so any unpaid super at 30 June will be non-deductible and will increase your taxable income.
Tip: Finalise payroll for the financial year a few days early and ensure all super contributions are paid and received by the fund or clearing house before 30 June 2025 to secure the deduction.
6. Review your ATO debt position
If you have significant ATO debts, such as income tax, BAS, or super guarantee charge amounts, it may be worth exploring refinancing options.
There are two key reasons to act now:
- The ATO’s interest rate is typically higher than standard bank lending rates, which means you could save on interest by refinancing through a lender.
- From 1 July 2025, ATO interest charges will no longer be tax-deductible. This includes both the General Interest Charge (GIC) and the Shortfall Interest Charge (SIC). If your ATO debt is substantial, losing this deduction could have a big impact on your tax position.
Now is a good time to review your financing options and speak with our internal broker to determine the best course of action.
Need Help?
If you’d like tailored advice on any of the above strategies, please get in touch with your designated Mobility + Doctors Wealth director or client manager before 30 June. Acting early can make a significant difference to your year-end tax position.
