The Importance of Strategic Tax Planning Now for the Final Six Months of FY2025

Article by David Apps, Director, TSP Accountants & Business Advisors. Connect with David here on Linkedin

As we enter the final six months of the 2024–2025 financial year, Australian businesses have a unique opportunity to optimise their tax positions with proactive planning. While tax planning is beneficial year round, the lead up to EOFY (end of financial year) is particularly critical. Early, strategic actions can help business owners reduce tax liabilities, improve cash flow, and avoid last minute stress. By engaging with a dedicated team of accounting professionals now, businesses can ensure they’re maximising deductions, adhering to ATO guidelines, and setting themselves up for a smoother EOFY process. Here’s a look at why you should prioritise tax planning now and how a professional team can make all the difference.

1. Why Tax Planning is Essential Now for EOFY Success

EOFY may still be months away, but the benefits of early tax planning are substantial. A proactive approach ensures you won’t be left scrambling to finalise financial records or missing key deductions under the pressure of looming deadlines. Here’s why planning now is so important:

Reduce EOFY Stress: Tax season can be overwhelming if you leave preparation to the last minute. Taking time now to get organised allows for more thorough reviews, ensuring nothing is missed and reducing stress for you and your team.
Improved Cash Flow Forecasting: Tax planning enables better visibility over your expected tax liabilities, allowing for more accurate cash flow projections and ensuring that you’re financially prepared for any upcoming tax payments.
Long term Strategy Alignment: Effective tax planning isn’t just about the short term. The right strategies can contribute to long term financial health, helping to balance current cash flow needs with future growth plans.

2. Key Tax Planning Actions for the Final Six Months

With six months to go, there are several key tax planning actions businesses should consider. Here are some strategic steps to optimise your tax position:

Income & Expense Review: Conduct a comprehensive review of all income sources and expenses. Make sure everything is properly categorised and aligns with ATO requirements, as this can make a significant difference when claiming deductions.
Prepaid Expenses: Consider prepaying certain expenses before EOFY to maximise current year deductions. Expenses like rent, insurance, and professional subscriptions can often be claimed in advance, which may reduce your taxable income for FY2025.
Capital Purchases: If your business needs new assets or equipment, consider making these purchases before EOFY to leverage tax deductions. Items like machinery, vehicles, or office upgrades can not only enhance operations but also deliver immediate tax benefits.
Superannuation Contributions: The timing of superannuation contributions is crucial for tax purposes. Making contributions before EOFY allows you to claim these amounts as a deduction in the current financial year, reducing your taxable income.
Bad Debts and Write offs: Assess receivables and identify any bad debts that should be written off. Writing off uncollectible debts reduces your business’s taxable income and may provide a valuable deduction, easing the overall tax burden.

3. Ensuring Accurate Record Keeping & Claiming All Legitimate Deductions

Accurate record keeping is a fundamental part of effective tax planning, especially as EOFY approaches. By maintaining thorough and organised financial records, you can ensure you’re claiming every legitimate deduction available:

Track and Categorise Everything: Make sure you’re capturing all business expenses and categorising them correctly. This can include everything from office supplies to professional development and travel expenses. Properly categorised expenses mean you’re more likely to claim eligible deductions fully and accurately.
Avoid Overlooked Deductions: Some business expenses often go unclaimed simply because they’re overlooked. Expenses such as professional memberships, interest payments on business loans, and software subscriptions are often deductible. By working with an accountant, you can avoid missing out on these deductions.
Regularly Update Financial Records: Don’t wait until EOFY to catch up on records. Regularly updating your financials ensures your books are accurate and ready for any ATO review, and it makes it easier for your accountant to identify potential tax saving opportunities.

4. The Role of Accounting Professionals in EOFY Preparation

Your team of accounting professionals can play a pivotal role in maximising your tax position. Accountants bring industry knowledge and insights into ATO regulations that help protect your business from errors and penalties. Here’s how they can support your business’s EOFY planning:

Expert Guidance on Tax Strategies: Tax laws and ATO regulations change frequently, and accountants are well versed in the latest updates. They can guide you through deductions, tax offsets, and strategies you may not be aware of, ensuring compliance and optimisation.
Detailed Reviews & Compliance Checks: A professional accounting team conducts thorough reviews to check for any gaps, errors, or compliance issues. This level of detail can prevent costly mistakes, such as misreporting income or over claiming deductions.
Collaborative Tax Planning: Accountants don’t just “do the numbers”; they collaborate with you to understand your business goals and create a tailored tax plan. This partnership leads to a proactive approach, anticipating needs rather than reacting to them, which can result in significant tax savings.

5. Avoiding Common EOFY Tax Mistakes

As EOFY approaches, there are common pitfalls that many businesses encounter. A strong tax plan can help you sidestep these issues:

Underreporting Income: All income sources must be accounted for. Failure to include all streams, whether from sales, services, or investments, can result in penalties and increased scrutiny from the ATO.
Incorrectly Claiming Deductions: Claiming deductions you’re not entitled to is a common error that can lead to ATO audits. Your accountant can ensure you’re only claiming legitimate expenses while maximising the deductions you’re eligible for.
Overlooking GST Requirements: Properly tracking and paying GST is essential for compliance. Accountants can help review and confirm that all GST obligations are met, reducing the risk of ATO fines.

By collaborating with a professional accounting team, you can be confident that these and other potential errors are reviewed and addressed well before EOFY.

Start Planning Today for a Successful EOFY

The last six months of the financial year are a golden opportunity to optimise your tax position, reduce liabilities, and set your business up for long term success. With the guidance of a skilled accounting team, you can ensure all deductions are captured, compliance is maintained, and cash flow is managed strategically. Don’t wait until EOFY is around the corner; take proactive steps now for a seamless, stress free end to FY2025.

Ready to get serious about your tax planning? Contact TSP Accountants & Business Advisors today to arrange a tax strategy session, and let’s work together to make the final six months of FY2025 your most tax efficient period yet.

Maximise Your Tax Savings in FY2025.