Tax Planning for Businesses: Maximising Cash Flow Before 30 June

For shrewd business owners, the end of the financial year (EOFY) isn’t just a compliance milestone—it’s the final chance to strategically reduce taxable income and improve cash flow. The golden rule of pre-30 June tax planning is simple: accelerate your deductions into the current financial year while legally deferring income into the next.

The most powerful tactic in this arsenal is the prepayment of expenses, combined with the strategic timing of vital business outlays like employee superannuation.

1. The Power of Prepayment: The 12-Month Rule

The Prepayment of Expenses rule allows eligible small businesses to claim a full deduction now for services they will use over the next year. This is a game-changer for cash flow management.

  • Who is Eligible? This strategy is available to businesses that are classified as small business entities (or would be if the aggregated turnover threshold was $50 million).  
  • The 12-Month Rule: You can claim a full deduction for expenses that are prepaid, provided the service period is 12 months or less and that period ends before the end of the next financial year (i.e., before 30 June 2026 for FY2025 claims).  
  • Common Prepayments to Accelerate:
    • Business Insurance Premiums: If your public liability, professional indemnity, or vehicle insurance renews in July or August, pay the annual premium before 30 June to claim the deduction this year.  
    • Rent or Lease Payments: Prepaying business rent or equipment leases for up to 12 months can lock in a significant deduction.  
    • Professional Subscriptions: Annual fees for software, professional association memberships, or industry subscriptions can be paid now.  

By reviewing your upcoming supplier invoices and paying those that fall under the 12-Month Rule now, you legally shift a chunk of your expected expenses into the current tax year, dramatically reducing your current taxable profit.  

2. The Critical Superannuation Deduction Deadline

The timing of your employee superannuation contributions is one of the most frequent mistakes small businesses make, often inadvertently deferring a major tax deduction.

  • The Key Requirement: Superannuation contributions are only deductible in the financial year in which they are received by the employee’s super fund.  
  • The Trap: The Superannuation Guarantee (SG) payment for the June quarter is not legally due until 28 July 2025. If you wait until the due date to pay it, the tax deduction will fall into the next financial year (FY2026).  
  • The Strategy: Expedite the payment of your June quarter SG and ensure the funds clear and are received by the fund before 30 June 2025. This ensures you secure the valuable deduction in the current financial year. For many businesses, this means processing the payment by mid-June to account for bank processing times.  

3. Reviewing Debtor and Stock Ledgers

Two straightforward, high-impact tasks businesses can complete before 30 June involve cleaning up the accounts:

  • Writing Off Bad Debts: If a specific debtor balance is genuinely irrecoverable, you must formally review your debtor ledger and write off the bad debt before 30 June. Only once the debt is formally written off in your books is it deductible.  
  • Obsolete Stock: Reviewing your inventory is critical. If you hold stock that is obsolete, damaged, or otherwise unsaleable (for example, outdated tech or expired goods), you can write off or write down the valuation of that stock. This lowers your closing stock value, which directly reduces your taxable income.  

4. Other Immediate Action Points

  • Motor Vehicle Logbooks: If your business claims motor vehicle expenses using the logbook method (based on actual costs), your 12-week logbook period must start on or before 30 June 2025. Ensure you also record your vehicle’s odometer reading as at 30 June.  
  • Trust Resolutions: If your business operates using a trust structure, you must finalise and document all income distribution decisions and resolutions before 30 June 2025. Missing this non-negotiable deadline can result in the trust’s income being taxed at the penalty rate of 47%.  
  • Deferring Income: For businesses accounting on a cash basis, strategically delaying the issuing of invoices or the receipt of debtor payments until after 30 June can legally shift the tax liability for that income into the following financial year (FY2026).  

By ticking off these time-sensitive actions before the clock runs out on 30 June, you ensure your business is in the best possible tax position, maximising your deductions and managing your corporate tax rate .