Tax Planning 2026: Important Steps before the Financial Year ends

With the end of the 2025–26 financial year approaching, now is the right time to review your tax position. Effective tax planning is not only about preparing your tax return after 30 June. It is about making informed decisions before year-end, while there is still time to act.

Good planning can help you manage tax, protect cash flow and reduce year-end stress. It can also help you identify opportunities that may not be available after 30 June. For example, superannuation contributions must generally be received by the fund before year-end. Trust distribution resolutions often need to be completed before 30 June. Businesses may also need to review stock, bad debts, employee bonuses and asset purchases before the financial year closes.

However, any strategy should be practical. Spending money only to obtain a tax deduction is rarely a good approach. A deduction reduces taxable income, but it does not refund the full cost. The best approach is to consider tax, cash flow and your broader financial goals together.

Below are key areas to review before 30 June 2026.

Review your income as part of tax planning

One of the first areas to consider is whether any income can be deferred into the next financial year. This may be useful where income has not yet been invoiced, and delaying the invoice is commercially appropriate.

For example, a business may complete work near the end of June but issue the invoice in early July. This may shift the income into the 2026–27 financial year. This strategy may be useful if you expect your income to be lower next year.

It may also be relevant because personal tax rates change from 1 July 2026. The 16% tax rate for the $18,201 to $45,000 bracket reduces to 15%. From 1 July 2027, that rate reduces again to 14%.

Even so, income deferral should be considered carefully. Cash flow may be more important than tax timing. Contract terms, accounting rules, personal services income rules and non-commercial loss rules may also affect the outcome.

Bringing forward deductions before 30 June

Another common tax planning strategy is to bring forward deductible expenses before 30 June. This may help reduce taxable income in the current financial year.

Common examples include office supplies, software, subscriptions, marketing costs, printing, repairs and maintenance. For property investors, some rental property expenses may also be worth reviewing before year-end.

The expense must be genuinely incurred before 30 June. It should also relate to income-producing activities. If the expense was already planned, bringing it forward may improve the timing of the deduction.

However, the decision should still make financial sense. Spending unnecessarily before 30 June can hurt cash flow. A tax deduction is useful, but it does not make poor spending worthwhile.

Prepaid expenses in year-end tax planning

Prepaid expenses can also form part of year-end tax planning. In some cases, you may be able to claim an immediate deduction for expenses paid in advance.

This may include insurance, subscriptions, rent, professional memberships or interest on investment loans. The rules depend on the amount paid, the period covered and the type of taxpayer.

For some taxpayers, an immediate deduction may be available where the prepaid expense is below $1,000. In other cases, the payment may need to cover a period of 12 months or less and end before 30 June 2027.

This area can be technical, so large prepayments should be reviewed before payment. The aim is to bring forward genuine deductions without creating compliance issues.

Business records, stock and bad debts

Businesses that hold stock should complete a stocktake before 30 June. This helps identify obsolete, damaged or slow-moving stock.

Where appropriate, stock may be written down to its net realisable value. This can reduce closing stock and lower taxable income. However, the write-down must be reasonable and supported by evidence.

Good records are important. Stock reports, photos, internal notes and supplier correspondence may help support the adjustment.

Bad debts should also be reviewed before year-end. If a customer debt is unlikely to be recovered, the business may be able to write it off and claim a deduction.

The debt must generally have been previously included as assessable income. The write-off should also be recorded in the accounting system before 30 June. Evidence of recovery attempts should be kept, including reminder emails, collection notes or correspondence.

Small business tax planning and asset purchases

Eligible small businesses should review asset purchases before 30 June. For the 2025–26 financial year, small businesses with aggregated turnover below $10 million may be able to claim an immediate deduction for eligible assets costing less than $20,000.

The asset must be first used or installed ready for use by 30 June 2026. This timing requirement is important. Ordering or paying for an asset before 30 June is not enough if the asset is not ready for use.

The threshold applies per asset. This means multiple assets may qualify if each asset costs less than the limit.

Before purchasing, business owners should consider whether the asset is genuinely needed. The purchase should support business operations, productivity or growth. It should not be made only for tax reasons.

Director fees and employee bonuses

Director fees and employee bonuses should be reviewed before 30 June. A business may be able to claim a deduction where it is genuinely committed to the payment before year-end.

This commitment should be properly documented. For director fees, this may include board minutes or director resolutions. For employee bonuses, this may include written confirmation to staff before 30 June.

The business should not wait until after year-end to decide that a payment was intended. The obligation should exist before 30 June and should be supported by records.

PAYG withholding usually arises when the amount is paid. However, the deduction depends on the legal commitment and the relevant circumstances.

Donations and deductible gifts

Donations can reduce taxable income if they are made to registered Deductible Gift Recipients. To claim the deduction in the 2025–26 financial year, the donation must be made before 30 June 2026.

You should keep receipts for all donations. You should also confirm that the organisation has Deductible Gift Recipient status.

The donation must be a genuine gift. This means you should not receive a material benefit in return. For families, it may be worth considering who should make the donation, as the tax benefit may be greater for the higher income earner.

Superannuation contributions in tax planning

Superannuation remains one of the most important planning areas before 30 June. For the 2025–26 financial year, the concessional contribution cap is $30,000. This includes employer superannuation, salary sacrifice amounts and personal deductible contributions.

If your total super balance was below $500,000 on 30 June 2025, you may also be able to use unused concessional cap amounts from previous years. These are known as carry-forward concessional contributions.

This strategy may be useful if your income is higher this year. It may also help if you have made a capital gain during the year.

If you plan to claim a personal super deduction, timing is critical. The contribution must be received by your super fund before 30 June. You must also lodge a valid notice of intent with the fund. The fund must acknowledge the notice before you claim the deduction.

It is best not to leave superannuation contributions until the final day. A bank transfer made on 30 June may not reach the fund in time.

After-tax super contributions and government co-contributions

After-tax superannuation contributions may also be relevant before 30 June. For the 2025–26 financial year, the non-concessional contribution cap is $120,000.

Some individuals may be able to use the bring-forward rule to contribute more. Eligibility depends on age, total super balance and previous contribution history.

Lower-income earners may also qualify for the government super co-contribution. For 2025–26, the maximum co-contribution is $500. The lower income threshold is $47,488, and the upper income threshold is $62,488.

This may be useful for eligible individuals who make personal after-tax contributions. However, eligibility rules should be checked before contributing.

Employer obligations and Payday Super

Employers should consider whether June quarter superannuation should be paid before 30 June. To claim a deduction in the 2025–26 financial year, the contribution generally needs to be received by the employee’s super fund before year-end.

This timing can be different from simply paying a clearing house. If payment is made too close to 30 June, the contribution may not reach the fund in time.

Employers should also prepare for Payday Super from 1 July 2026. From that date, superannuation will need to be paid at the same time as salary and wages.

This is a significant change from quarterly payment cycles. Employers should review payroll systems, cash flow and internal processes before the new rules begin.

Capital gains and investment tax planning

Investors should review capital gains and losses before 30 June. This includes gains from shares, managed funds, property, crypto assets and business assets.

If you have made capital gains during the year, you may consider whether any underperforming investments should be sold to realise capital losses. Capital losses can reduce capital gains. However, they cannot offset salary, business income or rental income.

Investment decisions should not be made only for tax reasons. You should also consider investment quality, cash flow and long-term goals.

You should also avoid wash sale arrangements. These occur where assets are sold and repurchased mainly to create a tax loss. The ATO may review these arrangements closely.

For property and other assets, timing is also important. The contract date usually determines the capital gains tax year, not the settlement date.

Rental property deductions and records

Property investors should review rental property records before tax time. The ATO continues to focus on rental property deductions, especially interest, repairs, private use and short-term accommodation.

Interest deductions should be checked carefully where loans have been refinanced. They should also be reviewed where redraw facilities have been used for private expenses.

Repairs and improvements should also be considered carefully. Repairs may be deductible, while improvements are usually capital and claimed over time.

If you own an investment property and do not have a depreciation report, you may consider obtaining one. A quantity surveyor report can help identify depreciation and capital works deductions.

Rental arrangements with family members should also be reviewed. If rent is below market value, deductions may be limited. Market rent evidence, a written lease and regular payment records can help support a commercial arrangement.

Vehicle logbooks and car expense claims

Motor vehicle claims remain a common ATO review area. If you use the logbook method, you need a valid logbook covering a continuous 12-week period.

The logbook should record trip dates, odometer readings, kilometres travelled and travel purpose. You should also record opening and closing odometer readings for the financial year.

A valid logbook may generally be used for up to five years. However, a new logbook may be required if your usage pattern changes significantly.

If you use the cents-per-kilometre method, you still need a reasonable basis for your claim. You cannot simply claim the maximum amount without evidence.

Trust distributions and year-end tax planning

If you operate through a discretionary trust, trust distribution resolutions should be prepared before 30 June. The trust deed should always be checked, as some deeds require an earlier date.

Failure to prepare a valid resolution can result in trust income being taxed to the trustee at the highest marginal tax rate. This can create an unnecessary tax cost.

Trustees should also consider whether the deed allows streaming of capital gains or franked dividends. Where available, streaming can be effective. However, it must be supported by the trust deed and proper documentation.

Trust distributions should reflect real arrangements. The ATO continues to focus on arrangements where one beneficiary is made entitled, but another person receives the economic benefit.

Division 7A and private company loans

Companies should review shareholder loans and related party transactions before year-end. If shareholders or associates have taken funds from a private company, Division 7A may apply.

Division 7A can treat certain loans, payments or forgiven debts as unfranked dividends. This can create a costly tax outcome.

Before 30 June, companies should review loan accounts and minimum yearly repayments. Amounts may need to be repaid, placed under a compliant loan agreement or otherwise managed appropriately.

Company tax rate and franking credits

Companies should check whether they qualify for the 25% company tax rate. This generally requires aggregated turnover below $50 million and no more than 80% of income as passive income.

Passive income includes interest, rent, royalties, dividends and net capital gains. If the company does not qualify, the tax rate is usually 30%.

The company tax rate should be reviewed each year. A company that qualified last year may not qualify this year, especially if it made a large capital gain.

Companies should also review franking credits before declaring dividends. Using the wrong franking rate can create administration issues and shareholder confusion.

Property and crypto record-keeping

The ATO receives data from banks, share registries, property platforms, crypto exchanges and other third parties. This makes accurate record-keeping more important than ever.

Property investors should keep purchase contracts, sale contracts, settlement statements, loan records, improvement costs, agent fees and legal costs. These records are essential for calculating capital gains correctly.

Crypto investors should keep records of purchase dates, sale dates, transfers, fees, exchange reports and wallet addresses. Crypto-to-crypto transactions can also have tax consequences.

Poor records can lead to incorrect reporting, missed deductions or ATO queries. Good records make tax time easier and reduce compliance risk.

ATO focus areas for 2026

The ATO continues to focus on areas where taxpayers commonly make mistakes. For individuals, this includes work-related deductions, home office expenses, motor vehicle claims, rental property deductions and crypto gains.

For businesses, focus areas include GST, contractor payments, unpaid superannuation, Division 7A, cash income, trust distributions and incorrect company tax rates.

This does not mean legitimate claims should be avoided. It means claims should be accurate, reasonable and supported by records.

Effective tax planning is not only about reducing tax. It is also about reducing risk and improving financial control.

Act before 30 June

Tax planning is most effective when it is done early. Waiting until 30 June, or after year-end, can limit your options.

Before year-end, individuals should review deductions, superannuation, investment income and capital gains. Business owners should review income timing, expenses, stock, bad debts, payroll, asset purchases and superannuation. Trustees should prepare trust resolutions, while company directors should review Division 7A, dividends and franking credits.

The best strategies are practical, legal and aligned with your wider financial goals. They should improve your position without creating unnecessary cash flow problems or compliance risks.

If you would like assistance with your 2026 end-of-financial-year tax planning, please contact our team at MaxGrowth on +61 2 9267 4468 or email contact@maxgrowth.com.au.

Disclaimer

This article provides general information only. It does not consider your personal circumstances, objectives or financial position.

Tax laws, ATO guidance, thresholds and rates can change. You should obtain professional advice before acting on this information.

This article is based on information available as at May 2026.