A Practical Guide to Business Tax Planning for 2025

Strategies you can use to minimise your business tax this financial year. 

IS YOUR BUSINESS A “SMALL BUSINESS” ENTITY?

Small businesses can access a range of tax concessions from the ATO. To qualify as a “Small Business Entity”, the business must have an total turnover (including of any business connected / affiliated with you) of less than $10 million; and be operating a business during the 2025 financial year. 

COMPANY TAX RATES

The 2025 company tax rate for businesses with less than $50 million turnover is 25%, as long as 80% or less of the company’s assessable income is “passive income” (such as interest dividends, rent, royalties, and net capital gains). 

If you use a Trust structure, one strategy is to allocate profits to a “Bucket Company” and cap your tax at 25% for the 2025 year. Note that this company must qualify as a “base rate” entity to be eligible for the lower 25% company tax rate. Please discuss with us whether your company will qualify. 

TAX STING – SALE OF ASSETS PREVIOUSLY 100% WRITTEN OFF

Until 30 June 2023, many businesses were able to claim 100% of assets purchased under the temporary full expensing or instant asset write off tax laws. 

When these assets are eventually sold, the amount received for it will be included in your assessable income for the year, and any replacement asset you buy will need to be depreciated if it is $20,000 or more. 

You may need to carefully plan for extra tax payable! 

NON-DEDUCTIBILITY OF ATO INTEREST CHARGES – EFFECTIVE 1 JULY 2025

From 1 July 2025, taxpayers will no longer be able to claim income tax deductions for interest charges imposed by the ATO. This includes: 

• General Interest Charge (GIC) 

• Shortfall Interest Charge (SIC) 

These changes apply regardless of the income year the underlying tax relates to. What matters is when the interest is incurred: 

• If GIC or SIC is incurred on or after 1 July 2025, it is not deductible. 

• Interest incurred before 1 July 2025 remains deductible under the current rules. 

However, any interest paid to you by the ATO—such as on a tax overpayment—remains assessable income and must be included in your tax return. 

MAXIMISE DEDUCTIBLE SUPER CONTRIBUTIONS

The concessional superannuation cap for 2025 is $30,000 for all individuals. Do not go over this limit or you will pay more tax! 

Note that employer super guarantee contributions are included in these caps. Where a concessional contribution is made that exceeds these limits, the excess is included in your assessable income and taxed at your marginal rate, plus you are lumped with an excess concessional contributions charge. 

TOOLS OF TRADE / FBT EXEMPT ITEMS

The purchase of Tools of Trade and other FBT exempt items for business owners and employees can be an effective way to buy equipment with a tax benefit.  

As long as their primary purpose is work-related, Iitems that can be packaged include handheld/portable tools of trade, computer software, notebook computers, personal electronic organisers, digital cameras, briefcases, protective clothing, and mobile phones. 

If structured correctly, the employer will be entitled to a tax deduction for the reimbursement payment to the employee (for the equipment cost), claim any GST input credit, and the employee’s salary package will only be reduced by the GST-exclusive cost of the items purchased.  

REPAIRS & MAINTENANCE

Make payments for repairs and maintenance (business, rental property, employment) BEFORE 30 June 2025.

PAY EMPLOYEE SUPERANNUATION NOW

To claim a tax deduction in the 2025 financial year, you need to ensure that your employee superannuation payments are received by the super fund or the Small Business Superannuation Clearing House (SBSCH) by 30 June 2025.  

  You should avoid making last minute superannuation payments as processing delays may cause them to be received after year-end. If for any reasons you end up having to make last minute payments and you would like to claim them as deductions for the current year, contact us immediately and before you make any payments for possible resolutions

DEFER INCOME & BRING FOWARD EXPENSES

If possible, defer issuing further invoices and receiving cash/debtor payments until after 30 June 2025.  This strategy pushes tax payable to future years. 

Purchase consumable items BEFORE 30 June 2025. These include marketing materials, consumables, stationery, printing, office and computer supplies. Spend the money now and get the deduction this year. 

MOTOR VEHICLE LOGBOOK

Ensure that you have kept an accurate and complete Motor Vehicle Logbook for at least a 12-week period. The start date for the 12-week period must be on or before 30 June 2025. You should make a record of your odometer reading as at 30 June 2025 and keep all receipts/invoices for motor vehicle expenses.  

An alternative (with no logbook needed) is to simply claim up to 5,000 business kilometres (based on a reasonable estimate) using the cents per km method. 

END OF YEAR STOCKTAKE / WORK IN PROGRESS

If applicable, you need to prepare a detailed Stock Take and/or Work in Progress listing as at 30 June 2025. Review your listing and write-off any obsolete or worthless stock items. 

Talk to us about your different options for valuing Stock, and how they affect your tax payable. 

WRITE OFF BAD DEBTS 

Review your Trade Debtors listing and write-off all bad debts before 30 June 2025. Prepare a management meeting document listing each bad debt, as evidence that these amounts were written off prior to year-end and enter these into your accounting system before 30 June 2025. 

PREPAYMENTS

small business Taxpayers can make prepayments (up to 12 months) on expenses (e.g. loan interest, rent, subscriptions) before 30 June 2025 and obtain a full tax deduction in the 2025 financial year. 

PRIVATE COMPANY – DIVISION 7A LOANS

Business owners who have borrowed funds from their company in previous years must ensure that the appropriate principal and interest repayments are made by 30 June 2025. Current year loans must be either paid back in full or have a loan agreement entered into before the due date of lodgement for the company return, or risk having it counted as an unfranked dividend in the return of the individual. 

TRUSTEE RESOLUTIONS 

Ensure that the Trustee Resolutions are prepared and signed BEFORE 30 June 2025 for all Discretionary (“Family”) Trusts. The ATO have recently released a number of Tax Rulings that may affect trust distributions to adult children, so Tax Planning for 2025 will be vital for anyone using a Family Trust. 

TALK TO US

Contact us for a personalised review and strategy session before 30 June. 

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IMPORTANT INFORMATION

This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from your financial adviser in conjunction with tax advice from us. Information is current at the date of issue and may change. 

Written By James Watson, Director