Tax planning is a powerful way to manage the financial performance of your business — but it’s important to remember that tax planning is not the same as value planning. Before taking action, make sure any strategy supports the long‑term health and value of your business. You can read more about this here:

One of the most common and effective approaches to reducing your tax liability is to legitimately increase your allowable business deductions. Below are six key areas you should consider before 30 June.

1. Review and Write Off Bad Debts

If your business operates on an accruals basis, you are taxed on income when it is invoiced — not when it is received.
This means unpaid invoices may be inflating your taxable income.

Before year‑end:

• Review your debtors ledger
• Identify customers or clients who are unlikely to pay
• Formally write off the bad debt in your accounts

Doing so reduces your assessable income and may also decrease your GST liability if GST was previously remitted on those invoices.

2. Scrap or Write Off Redundant Fixed Assets

Businesses often continue to carry assets on their books that are no longer in use, no longer exist, or have no remaining value.

You should:

• Review your fixed asset register
• Identify assets that should be written off
• Consider whether small business accelerated depreciation rules allow for immediate deduction

Writing off obsolete assets can deliver a direct tax benefit by recognising the real value (or lack thereof) of those assets.

3. Review Your Stock Valuation

Stock is required to be valued at the end of each financial year.
However, it does not have to be valued at cost.

You may be able to:

• Revalue stock to its lower replacement value
• Write off obsolete, damaged, or unsaleable stock

A reduced stock valuation decreases taxable income for the year.

4. Pay Superannuation Before 30 June

Superannuation for employees is only deductible when actually paid, not when accrued.

To claim a deduction in the current financial year:

• Ensure all employee superannuation contributions are paid and received by the fund before 30 June

This is one of the simplest and most powerful year‑end deduction strategies.

5. Accrued Director Fees

Director fees can be a useful and flexible tool for tax planning.
Under Taxation Ruling IT 2534, a company may:

• Accrue director fees in the current financial year
• Claim an immediate deduction
• Pay the directors in the following financial year

Importantly, the associated superannuation is only required when the fees are actually paid, providing additional timing flexibility.

6. Claim Black Hole Expenditure

Section 40‑880 of the ITAA 1997 allows a five‑year write‑off of certain business-related expenses that are not deductible under other provisions.

These may include:

• Costs of establishing a business
• Costs of developing or restructuring
• Capital‑raising expenses
• Costs related to ceasing a business

These “black hole” deductions can provide value in situations where expenses would otherwise be non-deductible.

Final Thoughts

Tax planning is not simply about reducing this year’s tax bill — it’s about improving your business’s overall financial position. Increasing your legitimate business deductions is an important part of this, but each decision should be assessed in the context of long‑term value and commercial benefit.

If you’d like tailored tax planning advice or a review of your current structure, our team is here to help.

McNamara & Company - Chartered Accountants, located minutes from the Melbourne CBD
www.mcnamaraandco.au/contact-us
 Phone +61 3 9428 1062
Email admin@mcnamaraandco.au

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