Tax tips for the end of financial year

As the end of the financial year (EOFY) approaches, it’s a great time to review your finances and implement strategies to minimise your taxes. Whether you’re an employee, investor, business owner, or planning for retirement, here are some key considerations to ensure you’re making the most of available tax benefits.

General tax tips

1. Maximise work-related and general deductions

• Work-related expenses: Ensure you claim all eligible expenses related to your job, such as uniforms, tools, supplies and professional subscriptions.
• Self-education expenses: If you’ve undertaken courses related to your current employment, these costs may be deductible.
• Charitable donations: Donations of $2 or more to registered charities are tax-deductible.

2. Review investment income and expenses

• Dividend income: Keep records of dividends received, including any franking credits.
• Managed funds: Gather annual tax statements from any managed funds you have to report income accurately (usually the managed fund provider will send you the statement).
• Capital gains/losses: If you’ve sold assets like shares or property, calculate any capital gains or losses. Remember, capital losses can offset capital gains.

3. Organise your financial records

• Maintain thorough records of all income, expenses, and deductions. Accurate documentation supports your claims and ensures compliance with ATO requirements, especially if you get audited!

Working from home deductions

With flexible work arrangements becoming commonplace, understanding how to claim work-from-home (WFH) expenses is crucial.

1. Fixed rate method – the simple option

• Claim 67 cents per hour for each hour worked from home.
• This rate covers energy expenses, internet, phone usage, and the decline in value of office furniture and equipment.
• Record keeping: Maintain a diary or timesheet recording the hours worked from home.

2. Actual cost method – the detailed option

• Claim the actual expenses incurred due to working from home, such as a portion of electricity bills, internet costs, and depreciation of office equipment.
• Record Keeping: Keep receipts and records of all expenses claimed. You may end up being able to claim more using this option, however the record keeping requirements are higher.

Investment property owners

If you own an investment property, you can claim the costs of holding the property as a tax deduction. This includes things like council rates, strata / body corp fees, interest & insurances. You can also consider the following to maximise your deductions:

1. Prepay expenses

• Prepaying expenses like insurance premiums or loan interest (up to 12 months in advance) before 30 June can bring forward deductions. This is great if you have a higher income this financial year than you are expecting for next financial year.

2. Repairs and maintenance

• Undertake necessary repairs & maintenance before EOFY to claim deductions in this financial year. Make sure you differentiate between repairs (deductible immediately) and improvements (capitalised and depreciated over time).

3. Depreciation schedules

• If you haven’t already, you can get a quantity surveyor to prepare a depreciation schedule, allowing you to claim depreciation on the building and fixtures.

Superannuation strategies

Superannuation remains an extremely tax-effective way to save for retirement. Keep in mind that you generally can’t access your super until retirement, but in terms of building long-term wealth tax effectively this is one of the best options.

1. Concessional (pre-tax) contributions

• The annual cap for concessional (before-tax) contributions is $30,000 (including what your employer has put into super for you. If you are below this amount, you can generally add extra to super before the end of June and claim it as a tax deduction.
• If your total super balance was under $500,000 on 30 June 2024, you may be eligible to carry forward unused cap amounts from previous years.

2. Spouse contributions and splitting

• Making contributions to your spouse’s super can provide tax offsets and help balance retirement savings.
• Consider splitting up to 85% of your concessional contributions with your spouse to manage super balances effectively.

Small business owners

For small business owners, EOFY is a critical time to assess financial strategies:

1. Instant asset write-off

• Eligible businesses can immediately deduct the business portion of assets costing less than $20,000, if purchased and installed by 30 June 2025.

2. Superannuation Guarantee

• Ensure all employee super contributions are paid and received by the fund before 30 June to claim a deduction in this financial year.

3. Review debtors and inventory

• Write off any bad debts before EOFY to claim a deduction.
• Conduct a stocktake and write down obsolete or slow-moving inventory.

Income protection insurance

Premiums for income protection are generally tax-deductible if the policy is held outside of superannuation.

• Review your policy to ensure it aligns with your current income and needs.
• Keep records of premium payments to substantiate your deduction claim (your insurer should send you these details).

Other considerations

Trust distributions

• If you operate a family trust, ensure distribution resolutions are prepared and signed before 30 June to effectively distribute income and manage tax liabilities.

Capital Gains Tax (CGT) planning

• Review your investment portfolio for any assets that could be sold to realise capital gains or losses.
• Utilise capital losses to offset capital gains, reducing your overall tax liability.

Stage 3 tax cuts

• Be aware of the Stage 3 tax cuts effective from 1 July 2024, which may impact your tax planning strategies for the 2025 financial year.

Final thoughts

End of financial year isn’t just about ticking boxes – it’s a chance to take control of your finances, fine-tune your tax strategy, and make sure your money is working smarter, not harder.

As the late Kerry Packer famously said during a 1991 parliamentary inquiry:

“I am not evading tax in any way, shape or form. Now, of course, I am minimising my tax, and if anybody in this country doesn’t minimise their tax they want their heads read because, as a government, I can tell you you’re not spending it that well that we should be donating extra.”

While a bit tongue-in-cheek, the message rings true: tax minimisation, when done legally and strategically, is just good financial sense. It’s not about loopholes it’s about being informed, intentional, and proactive.

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The Money & Life website is operated by the Financial Advice Association (FAAA). The views expressed in this article are those of the author and not those of the FAAA. The FAAA does not endorse or otherwise assume responsibility for any financial product advice which may be contained in the article. Nor does it endorse or assume responsibility for the information.