As we approach the end of the financial year, many business owners fall into the trap of thinking they can wait until June 30 to start thinking about tax. But by then, it’s often too late to make meaningful changes that reduce your tax liability or optimise your financial outcomes.
Smart business owners plan ahead. At W M Wright & Co, we believe in giving you the time, advice, and support you need to take control of your finances, not just for tax savings, but for long-term business health.
If you haven’t yet reviewed your tax position for this financial year, now is the time. To get you started, we’ve outlined five key strategies that we regularly use with our business clients. Each one has the potential to improve your position, but remember, everyone’s situation is different. These tips are not a substitute for tailored advice.
Tip 1: Write off any bad debts
If you have customers who still haven’t paid and you’ve made all reasonable attempts to collect, it may be time to accept that some debts are unrecoverable. Writing off bad debts before the end of the financial year ensures they don’t inflate your taxable income.
But it’s not as simple as deciding a debt is “bad.” The debt must:
- Have previously been included as assessable income;
- Be genuinely unrecoverable (not just overdue);
- Be written off in your accounting records before June 30.
Tip: Keep detailed records of your collection efforts. This includes reminder emails, call logs, and any legal correspondence. The ATO may ask you to prove the debt was genuinely bad if you’re audited.
Tip 2: Consider paying some expenses in advance
In some cases, prepaying expenses can help bring forward deductions and lower your taxable income. You might be able to prepay up to 12 months’ worth of costs such as:
- Insurance premiums
- Subscriptions for business-related services
- Lease or rental agreements
- Memberships and licenses
However, this strategy only works if:
- The supplier agreement allows prepayment;
- You have the cash flow to support it;
- The payment meets ATO eligibility rules.
Important caution: Avoid prepaying large expenses (like rent) unless it’s part of a long-term strategy you plan to repeat annually. Prepayments can impact future cash flow and aren’t always advisable if your business has seasonal fluctuations.
Tip 3: Invest in equipment or vehicles
The Instant Asset Write-Off allows eligible businesses to claim an immediate deduction for the business portion of the cost of an asset in the year it’s first used or installed. This includes assets like:
- Computers and office furniture
- Tools and machinery
- Motor vehicles used for business purposes
To qualify:
- The asset must be installed and ready for use by June 30;
- You must meet the relevant turnover threshold;
- The asset must cost less than the ATO’s current threshold for your business type.
Before you buy: This rule changes frequently, and thresholds vary based on the business’s aggregated turnover. Always check the latest ATO guidance or talk to us directly.
Tip 4: Understand your mixed-use deductible expenses
Some business expenses don’t fall neatly into “personal” or “business.” Items like mobile phones, vehicles, and home internet are commonly used for both.
The ATO allows you to claim the business-use portion, but you must keep appropriate records. This may include:
- A logbook for vehicle use (for at least 12 continuous weeks);
- Phone bills with business calls highlighted;
- A diary of work-from-home hours and purposes.
Accurate records protect you if you’re audited. Vague estimates or guesses are not enough. Keeping up-to-date logs and receipts makes claiming deductions simpler and more defensible.
Tip 5: Keep your records up to date and organised
Good recordkeeping isn’t just about staying compliant, it’s one of the best ways to understand your business performance and spot opportunities.
Before June 30, ask yourself:
- Are all business expenses recorded?
- Have I invoiced for all work completed?
- Have I followed up overdue payments?
- Are all receipts and bills accounted for?
If not, now is the time to get organised. A cloud-based accounting system can make this much easier, and we can help set you up with one.
Tip: Keeping receipts and invoices isn’t enough. You also need to record the purpose of each expense and match it to income where applicable. This helps justify the deduction and gives you a clearer picture of profitability.
Don’t Wait Until It’s Too Late
Tax planning isn’t just about saving money. It’s about making confident decisions that support the long-term financial health of your business. Waiting until June 30 is a reactive approach. By then, many strategic options are off the table.
Let’s review your profits, expenses, assets, and future plans together. With the right guidance, you can make informed decisions before June 30 that position you for a stronger new financial year.
Contact us today to book your tax planning review.
