As 30 June approaches, it’s time for business owners to get their end-of-year tax planning in order. Taking the right steps now can help you maximise deductions, manage compliance risks, and reduce your overall tax bill. From paying super to reviewing shareholder loans, here are key actions to consider before the financial year ends.
If your company has advanced funds to a shareholder or related party, paid expenses or allowed a shareholder or other related party to use assets owned by the company, then this can be treated as a taxable dividend. The regulators expect that top-up tax (if any applies) should be paid by shareholders at their marginal tax rate once they have access to these profits. When it comes to loans, a complying loan agreement can normally be used to prevent the full loan balance from being treated as a taxable dividend.
If you have any shareholder loan accounts from prior years that were placed under complying loan agreements, the minimum loan repayments need to be made by 30 June 2025. It may be necessary for the company to declare dividends before 30 June 2025 to make these loan repayments.
The tax rules in this area can be extraordinarily complex and can lead to some very harsh tax outcomes. It is important to talk to us as soon as possible if you think your company has made payments or advanced funds to shareholders or related parties.
Any expected directors’ fees and employee bonuses may be deductible for the 2024-25 financial year if you have ‘definitely committed’ to the payment of a quantified amount by 30 June 2025, even if the fee or bonus is paid to the employee or director after 30 June 2025.
You would generally be definitely committed to the payment by year-end if the directors pass a properly authorised resolution to make the payment by year-end. The employer should also notify the employee of their entitlement to the payment or bonus before year-end.
The accrued directors’ fees and bonuses need to be paid within a reasonable time period after year-end.
To be a bad debt, you need to have brought the income to account as assessable income and given up all attempts to recover the debt. It needs to be written off your debtors’ ledger by 30 June. If you don’t maintain a debtors’ ledger, a director’s minute confirming the write-off is a good idea.
Check to see if obsolete plant and equipment is sitting on your depreciation schedule. Rather than depreciating a small amount each year, if the plant has become obsolete, scrap it and write it off before 30 June. Small business entities can choose to pool their assets and claim one deduction for each pool. This means you only have to do one calculation for the pool rather than for each asset.
To claim a deduction for the 2024-25 financial year, consider paying for any required repairs, replenishing consumable supplies, trade gifts or donations before 30 June.
Pay June quarter super contributions this financial year if you want to claim a tax deduction in the current year. The next quarterly superannuation guarantee payment is due on 28 July 2025. However, some employers choose to make the payment early to bring forward the tax deduction instead of waiting another 12 months.
Don’t forget yourself. Superannuation can be a great way to get tax relief and still build your personal wealth. Your personal or company sponsored contributions need to be received by the fund before 30 June to be deductible.
Neutralise the tax effect of any capital gains you have made during the year by realising any capital losses – that is, sell the asset and lock in the capital loss. These need to be genuine transactions to be effective for tax purposes. If assets are transferred to related parties in order to crystallise a capital loss then this can draw the ATO’s attention and anti-avoidance rules could be applied.
Where management fees are charged between related entities, make sure that the charges have been raised by 30 June. Where management charges are made, make sure they are commercially reasonable and documentation is in place to support the transactions. If any transactions are undertaken with international related parties, then the transfer pricing rules need to be considered and the ATO’s documentation expectations will be much greater. This is an area under increased scrutiny.
From managing shareholder loans to prepaying expenses and superannuation contributions, smart year-end planning can make a significant difference to your tax outcome.
At WLM Accounting, we help business owners take full advantage of legitimate tax opportunities, stay compliant with ATO expectations, and avoid costly mistakes—especially in complex areas like Division 7A loans, director bonuses, and inter-entity transactions.
For a discussion about your business or personal accounting and tax needs, reach out to WLM today.
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The information contained in the WLM website, has been prepared from a wide variety of sources, which WLM, to the best of its knowledge and belief, considers accurate. WLM does not however warrant the accuracy of the information and forecasts possibly contained in the WLM website. No visitor to the site should rely upon the information and/or recommendations contained in the WLM website. WLM strongly recommends that all prospective purchasers of securities should make their own inquiries and seek professional advice before acting on any of the information contained in the WLM website. Should you wish to seek advice, please feel welcome to contact us.
