As the end of the financial year approaches on June 30, 2025, it’s crucial for Australian individuals and businesses to engage in proactive tax planning with their tax accountant Melbourne. This period offers opportunities to maximise deductions and position yourself advantageously for the upcoming financial year. Here’s what you need to know:
1. Updated Income Tax Brackets
Effective from July 1, 2024, the Australian government implemented changes to personal income tax brackets:
- $0 – $18,200: Tax-free
- $18,201 – $45,000: 16%
- $45,001 – $135,000: 30%
- $135,001 – $190,000: 37%
- $190,001 and over: 45%
These adjustments aim to reduce the tax burden on middle-income earners and do not include the medicare levy. There will be further changes to marginal tax brackets from 1 July 2026 as promised by the Albanese government.
2. Superannuation Contributions
- Increased Cap: The concessional contributions cap has risen to $30,000, meaning that $30,000 can be claimed as a tax deduction for contributions made into super.
- Payment Timing: To claim a deduction for the 2024–25 financial year, ensure your super contributions are received by your fund before June 30, 2025. Delays can result in the deduction being deferred to the next financial year, Div 293 and potential over contributions tax.
- Super Guarantee Increase: From July 1, 2025, the Superannuation Guarantee rate will increase from 11.5% to 12% meaning that employees need to be paid 12% of their gross income into their superannuation funds.
3. Instant Asset Write-Off
Small businesses with an aggregated turnover under $10 million can immediately deduct the business portion of assets costing less than $20,000, provided the asset is installed and ready for use by June 30, 2025.
4. Prepaying Expenses
Businesses can bring forward deductions by prepaying expenses such as rent, insurance, and subscriptions for services to be provided within 12 months. This strategy can reduce taxable income for the current financial year.
5. Reviewing Capital Gains and Losses
Assess your investment portfolio for any capital gains or losses. Realising losses before June 30 can offset gains and reduce your capital gains tax liability.
6. Superannuation Tax Changes for High Balances
The government has proposed a new tax on superannuation earnings for balances exceeding $3 million, introducing an additional 15% tax on earnings above this threshold. When legislated, this change will take effect from July 1, 2025, potentially impacting around 80,000 individuals. Please contact Nobel Thomas if you have any questions about this change.
7. Compliance and Record-Keeping
- Work-Related Deductions: Ensure you have detailed records for any work-related expenses, especially for home office claims, as the ATO is scrutinising these deductions.
- Avoiding Tax Traps: Be cautious of “wash sales,” where assets are sold and repurchased shortly after to create artificial losses. The ATO considers this a tax avoidance scheme. Please contact your tax accountant Melbourne, such as Nobel Thomas, if you have any questions about wash sales or any tax planning matters.
8. Charitable Donations
Donations of $2 or more to registered charities are tax-deductible. Ensure you have receipts for all contributions made before June 30 to claim deductions.
9. Final Tips
- Review Business Structures: Assess whether your current business structure is still the most tax-effective. Please contact Nobel Thomas for a no obligation discussion to ensure you have the most tax effective structure. Changes to structure might offer better tax outcomes.
- Consult Professionals: Engage with a tax accountant Melbourne to ensure you’re maximising deductions and complying with all ATO obligations.
- Stay Informed: Keep abreast of any legislative changes that may affect your tax planning strategies.
Conclusion
Effective tax planning before June 30, 2025, can lead to significant savings and set a strong foundation for the next financial year.
