As May 2025 draws to a close it is time to think about whether you are ready for End of Financial Year (EOFY). Are there things you could do now that would reduce your tax bill for 2025?
Utilising Concessional Superannuation Caps
If you have unused concessional superannuation caps for this year or, if your superannuation balance is below $500k for any of the previous 5 years, you could make a personal superannuation contribution before 30 June 2025 and lodge the declaration to treat it as concessional.
Why?
- Personal concessional contributions are tax-deductible – saving you tax in your income tax return
- If you intend to retire in Australia – you are growing your tax-effective retirement savings
- Carry-forward concessional contributions are lost after 5 years or once your superannuation balance passes $500k – so you may not get this chance again!
Business – Using the Instant Asset Write-Off
The Instant Asset Write-Off increase to $20,000 has been extended to 30 June 2025.
As far as we know at the moment, this is your last chance to get an immediate 100% tax-deduction, against your business income, for qualifying asset purchases costing <$20,000.
To qualify:
- The aggregated turnover of the business must be <$10m and
- The asset must be installed ready for use by 30 June 25
Bringing Forward Expense Deductions
If there are costs you know you will incur relating to services that will be provided between 1 July 2025 and 30 June 2026, whether for:
- Rental Properties or
- Work-Related Annual Expenses – eg Professional Fees or Subscriptions
If you pay for them and incur the cost before 30 June 2025, you can claim the tax-deduction in your 2025 tax return, so getting the tax-relief earlier.
NOTE: ATO has specific conditions for prepaid expense deductions, so if you are not sure, please do ask us.
Charitable Donations
Donations to Registered Gift Recipients (ATO has a list you can check if you are not sure) are tax-deductible in your Income Tax Return.
If you are considering making a donation for 2025, make sure:
- You have checked the charity is a Deductible Gift Recipient
- You have made the donation by 30 June 25 – and the charity has received it by then and
- You have a receipt from the charity to evidence the donation
Crystallising Capital Losses to Offset Gains
If you have made a capital gain on an asset disposal since 1 July 2024 and you have other assets standing at a loss, that are unlikely to recover, you might want to consider crystallising the losses, by selling the loss-making assets, before 30 June 2025 so that the Capital Losses can help to reduce the Capital Gains, saving you tax.
Preserving your CGT Discount
If you are considering selling a Capital Asset that is standing at a gain that you acquired on or after 1 July 2024, you might want to think about delaying the sale until you have held it for at least 12 months.
Why?
Because if the asset is held for 12 months before sale, and you have been resident in Australia throughout that period, most assets qualify for the CGT discount, which will halve your taxable gain and save you tax.
NOTE: In most cases it is the exchange date/trade date not settlement that is the date of disposal for tax, ask us if you are not sure.
Medicare Levy Surcharge
Medicare Levy Surcharge (MLS) is an additional charge that applies in your Income Tax Return if:
- You and all your dependents are not covered by qualifying Australian Private Health Insurance (PHI) for the whole tax year AND
- Your Adjusted Taxable Income (Combined ATI for taxpayers with Spouses) exceeds the MLS threshold
If you don’t already have qualifying PHI in place, it may be time to weigh-up the cost of the insurance vs the cost of the annual MLS charge. It is too late to avoid the MLS for 2025 now, if you don’t already have it in place – but take out insurance by 1 July 2025 and you could save yourself the additional tax for 2026.
For help with any of these points, get in touch with your Fairway team.
