How to Reduce Company Tax Before EOFY (Legally!)
As the Australian financial year draws to a close on 30 June, business owners often start scrambling to find ways to reduce their tax bill. The good news? There are plenty of legitimate, ATO-approved strategies to reduce your company tax—if you plan ahead and act before the deadline.
1. Bring Forward Your Expenses
If you know you’ll need certain business-related goods or services soon, consider purchasing them before EOFY. This can help you claim deductions in the current financial year rather than waiting until next year.
- Prepay rent, subscriptions, or insurance premiums
- Stock up on office supplies or equipment
- Pay for upcoming training courses or professional memberships
2. Take Advantage of the Instant Asset Write-Off
The ATO allows eligible businesses to immediately deduct the full cost of certain assets in the year they are purchased and installed. This can be a huge tax saver, especially for equipment, machinery, and technology upgrades.
Tip: The rules and thresholds for the instant asset write-off can change, so check the current limits before making a purchase.
3. Pay Superannuation Early
Employer super contributions are only deductible when they are received by the super fund. Paying your employees’ superannuation before 30 June ensures you can claim the deduction this financial year.
4. Write Off Bad Debts
If you have outstanding invoices that are unlikely to be paid, consider writing them off before EOFY. Make sure you have evidence that the debt is genuinely unrecoverable.
5. Review Your Stock Levels
Stock that has lost value due to obsolescence or damage can be written down or written off, which may reduce your taxable income.
6. Defer Income (Where Possible)
If cash flow allows, you may be able to delay issuing invoices until after EOFY, pushing that income into the next financial year. This is particularly useful if you expect to be in a lower tax bracket next year.
7. Use a Registered Tax Agent
Working with a registered tax agent like Taxopia ensures you’re claiming all legal deductions and complying with ATO rules. The cost of using a tax agent is also tax-deductible.
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FAQs
Can I claim expenses if I haven’t paid for them yet?
Under accrual accounting, you can claim deductions for expenses you have incurred but not yet paid. However, cash-basis businesses can only claim once payment has been made.
Is it legal to delay issuing invoices to reduce tax?
Yes, but only if it aligns with normal business practices. Artificially delaying invoices solely to avoid tax may attract ATO attention.
What’s the penalty for claiming ineligible deductions?
The ATO can impose penalties, interest, and require repayment of the tax avoided. Always seek professional advice before claiming.