The end of the financial year (EOFY) is a crucial time for small business owners to review their financial position and prepare for the year ahead. With the right planning in place, EOFY tax strategies can help reduce your tax liability, improve cash flow, and strengthen your overall business performance. Taking action before June 30 can make a significant difference.
Below are five smart EOFY strategies every small business owner should consider.
Prepay Expenses Where Possible
Prepaying eligible business expenses before EOFY can help bring forward tax deductions into the current financial year. Common expenses include rent, insurance premiums, software subscriptions, and professional fees. To remain compliant with ATO guidelines, prepayments should generally relate to services that will be used within the next 12 months. This strategy can be especially useful if your business has had a strong year and you want to manage your taxable income.
Accelerate Depreciation on Assets
If your business needs new equipment, vehicles, or technology, purchasing them before June 30 may allow you to claim an immediate deduction. The instant asset write-off enables eligible businesses to deduct the full cost of qualifying assets, reducing taxable income for the current year. This approach not only provides tax benefits but also supports business growth by upgrading essential tools and systems.
Review Debts and Outstanding Invoices
EOFY is the ideal time to review your accounts receivable. Follow up on outstanding invoices to improve cash flow and assess whether any debts are unlikely to be recovered. Bad debts that are written off before June 30 may be claimed as a tax deduction, giving you a more accurate picture of your business’s true financial position.
Contribute to Superannuation
Making additional superannuation contributions before EOFY is a tax-effective strategy for both business owners and employees. Employer contributions are generally tax-deductible, while personal contributions (within contribution caps) can reduce your taxable income. Beyond tax benefits, this strategy also supports long-term retirement planning and financial security.
Plan Your Stock and Inventory
Reviewing your inventory levels before EOFY can uncover opportunities for additional deductions. Obsolete, damaged, or slow-moving stock may be written down to its net realisable value, reducing taxable income. This process also helps streamline your inventory, improve storage efficiency, and prepare your business for the next financial year.
Tax planning isn’t just about maximising deductions—it’s about understanding your business, forecasting cash flow, and making informed financial decisions that support sustainable growth.
Need help navigating EOFY strategies tailored to your business? Book a consultation with DMT Accounting today and ensure your business is well-positioned for a strong financial year ahead.
