Smart Tax Planning Strategies for the 2025 Financial Year

The start of a new financial year isn’t just about meeting tax obligations—it’s an opportunity to take control of your finances and plan ahead. Whether you’re a business owner or an individual taxpayer, proactive tax planning can help you legally minimize tax, improve cash flow, and set yourself up for financial success. Here’s what you should be considering for the 2025 financial year.

1. Review Your Business Structure

If you operate as a sole trader or partnership, now might be the time to assess whether transitioning to a company or trust structure could provide tax benefits and asset protection. The right structure can:
✔ Reduce tax liabilities through income splitting
✔ Provide access to lower company tax rates
✔ Improve liability protection

Each structure has its pros and cons, so it’s worth reviewing with a professional.

2. Make the Most of Superannuation Contributions

Contributing to superannuation remains one of the most tax-effective ways to save for retirement while reducing taxable income. Key considerations include:

• Concessional (before-tax) contributions: The cap remains at $27,500 for the 2024–25 year. Employer contributions and salary sacrifice arrangements count toward this limit.
• Non-concessional (after-tax) contributions: Up to $110,000 per year (or $330,000 over three years under the bring-forward rule).
• Superannuation co-contributions: If you earn less than $58,445, you may be eligible for a government co-contribution of up to $500.

Making voluntary contributions before 30 June can provide immediate tax benefits.

3. Take Advantage of the Instant Asset Write-Off

The $20,000 instant asset write-off is available for small businesses purchasing eligible assets before 30 June 2025. This allows you to immediately deduct the full cost of business equipment, vehicles, and machinery, rather than depreciating them over time.

If you’re planning on investing in new assets, timing your purchase before year-end could reduce taxable income.

4. Manage Division 7A Loans

If your private company has provided loans to shareholders or related parties, they may fall under Division 7A rules, which can result in unexpected tax liabilities. Ensure:
✅ Loans are properly documented with a complying loan agreement
✅ Minimum yearly repayments are made to avoid deemed dividends
✅ Alternative strategies are considered to reduce Division 7A exposure

With recent court rulings impacting Division 7A interpretations, now is a good time to review existing loan arrangements.

5. Prepay Expenses Where Possible

Bringing forward deductible expenses into the current financial year can help lower taxable income. Businesses and individuals with investment properties can consider prepaying:
✔ Rent
✔ Interest on loans
✔ Insurance premiums
✔ Subscriptions and professional memberships

Small businesses using cash accounting can also benefit from paying expenses before 30 June to maximize deductions.

6. Maximize Work-Related Deductions

For individuals, reviewing your work-related expenses can uncover valuable deductions. This includes:

• Home office expenses (especially for remote workers)
• Work-related car expenses (now at 88c per km)
• Self-education and training costs
• Tools, equipment, and protective clothing

Keeping good records ensures you claim every deduction you’re entitled to.

7. Consider Capital Gains Tax (CGT) Strategies

If you’re selling investments like shares or property, consider CGT timing:

• If you’ve made capital gains, offset them with any capital losses.
• Holding an asset for more than 12 months reduces CGT by 50% for individuals and trusts.
• Deferring asset sales to the next financial year could help manage tax obligations.

CGT exemptions and small business concessions may also be available, so reviewing your portfolio now can save you money.

8. Stay Ahead with Tax Compliance

The ATO is increasing scrutiny on:
⚠ Work-related deductions and overclaimed expenses
⚠ Incorrect GST reporting by businesses
⚠ Rental property claims, including interest deductions

Keeping accurate records and lodging correctly the first time can help avoid unnecessary audits and penalties.

Start Planning Today

Smart tax planning isn’t just about compliance—it’s about keeping more of your money in your pocket. Whether it’s reducing tax, optimizing business cash flow, or planning for the future, the best time to act is now. Let’s talk about your options and put a strategy in place that works for you.