2025 Tax Planning Guide Part 2
From 1 July 2025: From July 1, 2025, the compulsory Super Guarantee Contribution (SGC) rate increases from 11.5 % to 12%.
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Extra Checklist of Year End Tax Issues not included in Part 1 last month.
In addition to the tax planning opportunities, there are several obligations in relation to the end of the financial year which should be considered:
If you use a Motor Vehicle in producing your income you may need to:
- Record Motor Vehicle Odometer readings at 30 June 2025
- Prepare a logbook for 12 continuous weeks if your existing one is more than 5 years old. Please note, if you commence the logbook prior to June 30, 2025, the usage determined will still be appropriate for the whole of 2024/25. As such, it is not too late to start preparing one for the current financial year.
If you are in business or earn your income through a Company or Trust:
Employer Compulsory Superannuation Obligations:
The deadline for employers to pay Superannuation Guarantee Contributions (SGC) for the 2024/25 financial year is the 28 July 2025. However, if you want to claim a tax deduction in the 2024/25 tax year the super fund (or Small Business Superannuation Clearing House) must receive contributions by 30 June 2025. Also avoid making contributions at the last minute because processing delays could deny you a significant tax deduction in this financial year.
For Private Company – Div 7A Loans
Business owners who have borrowed funds from their company in prior years must ensure that the appropriate principal and interest loan repayments are made by 30 June 2025. Loans taken out in the current year must be either paid back in full or have a loan agreement entered into before the due date of lodgement of the company return. Failure to comply risks having it counted as an unfranked dividend in the individual’s tax return
Trustee Resolutions
Ensure that the Trustee Resolutions on how the income from the trust is distributed to the beneficiaries are prepared and signed before June 30, 2025, for all Discretionary (“Family”) Trusts. If a valid resolution hasn’t been executed by this date, the default beneficiaries become entitled to the trust’s income and are then subject to tax. Income derived but not distributed by the trust will mean the trust will be assessed at the highest marginal rate on this income.
Preparation of Stock Count Working Papers at June 30, 2025.
Preparation and reconciliation of Employee PAYG Payment
PAYG Summaries were formerly known as Group Certificates. Note you are not required to supply your employees with payment summaries for amounts you have reported and finalised through Single Touch Payroll.
Company Tax Rates for Small Businesses
The company tax rate for base rate entities with less than $50 million turnover was 25% for the 2025 financial year where it as:
- An aggregated turnover less than the aggregated turnover threshold ($50 million)
- 80% or less of their assessable income is base rate entity passive income – this replaces the requirement to be carrying on a business.
Business Should also Consider the Following Items
Stock Valuation Options – Review your Stock on Hand and Work in Progress listings before June 30 to ensure that it is valued at the lower of Cost or Net Realisable Value. Any stock that is carried at a value higher than you could realise on sale (after all costs associated with the sale) should be written down to that Net Realisable Value in your stock records.
Write-Off Bad Debts – if you operate on an accrual’s basis of accounting (as distinct from a cash basis) you should write off bad debts from your debtors listing before June 30. A bad debt is an amount that is owed to you but you consider is uncollectable or not economically feasible to pursue collection. Unless these debts are physically recorded as a ‘bad debt’ in your system before 30th June 2025, a deduction will not be allowable in the current financial year.
Repairs and Maintenance Costs – Where possible and cash flow allows, consider bringing these repairs forward to before June 30. If you don’t understand the distinction between a repair and a capital improvement, please consult with us because some capital improvements may not be tax deductible in the current year and could be claimable over a number of years as depreciation.
Obsolete Plant and Equipment – should be scrapped or decommissioned prior to June 30, 2025, to enable the book value to be claimed as a tax deduction.
Superannuation Tax Planning Opportunities
Compulsory Superannuation Guarantee – If you want a tax deduction in the 2024/25 financial year, the superannuation fund must receive the funds by 30 June 2025. The Tax Office doesn’t consider a contribution to be made until the amount is actually credited to a super fund’s bank account so an electronic transfer to another bank account on June 30 is not necessarily considered paid. We strongly recommend you make the payment a week or so before June 30 and then follow up with the super fund to ensure the funds have been received. Don’t risk the tax deductibility of what can often be a significant amount by leaving payment to the last minute.
Concessional Contributions Cap of $30,000 for Everyone
The tax-deductible superannuation contribution limit or cap is $30,000 for all individuals regardless of their age for the 2024/25 financial year.
If eligible and appropriate, consider making the most of your 2024/25 financial year annual concessional contributions cap with a concessional contribution. Note that other contributions such as employer Superannuation Guarantee Contributions (SGC) and salary sacrifice contributions will have already used up part of your concessional contributions cap.
Carry Forward Concessional Contributions
If your total superannuation balance as of June 30, 2024, was less than $500,000 you may be able to carry-forward unused concessional caps for up to 5 years.
Members can access their unused concessional contributions caps on a rolling basis for five years and amounts carried forward that have not been used after five years will expire.
Typically, self-employed individuals and those who earn their income primarily from passive sources like investments make their super contributions close to the end of the financial year to claim a tax deduction. However, individuals who are employees may also use this strategy and those who might want to take advantage of this opportunity.
Non-Concessional Super Contributions
If eligible and appropriate, consider utilising all or part of your 2024/25 financial year annual non-concessional contributions cap by making a non-concessional contribution for up to $120,000 for the 2025 financial year or up to $360,000 over 3 years.
Government Co-Contribution to Your Superannuation
The Government co-contribution is designed to boost the superannuation savings of low and middle-income earners who earn at least 10% of their income from employment or running a business. If your income is within the thresholds listed below and you make a ‘non-concessional contribution’ to your superannuation, you may be eligible for a government co-contribution of up to $500.
To be eligible you must be under 71 years of age as of June 30, 2025. In 2024/25, the maximum co-contribution is available if you contribute $1,000 and earn $44,500 or less. A lower amount may be received if you contribute less than $1,000 and/or earn between $44,500 and $60,400. If unsure then ask your tax agent for clarification.
The matching rate is 50% of your contribution and additional eligibility include: having a total superannuation balance of less than $1.9 million on 30 June of the year before the year the contributions are being made having not exceeded your non-concessional contributions cap in the relevant financial year
Transition to Retirement
If you don’t want to fully retire and would like to reduce your working hours you can take advantage of what is known as “Transition to Retirement” TTR. This means that providing you have reached your preservation age, see below, you can elect to keep working full time or part-time and take money out of your super to supplement your income. This is popular for those who want to scale down their working hours rather than retiring.
Date of Birth Preservation Age
Before 1 July 1960 55
1 July1960 – 30 June 1961 56
1 July 1961 – 30 June 1962 57
1 July 1962 – 30 June 1963 58
1 July 1963 – 30 June 1964 59
1 July 1964 – 30 June 1965 60
When you are receiving a TRT pension you can still work and claim a tax deduction for concessional contributions into your super up to $30,000 for the 2025 financial year.
If you decide to implement a TTR strategy, you must withdraw a minimum amount, currently 4% for someone aged 60 (based on age) from your superannuation account balance up to a maximum of 10%.
If you are under 60 any amount you withdraw will be subject to tax at your marginal rate of tax. You will also be entitled to receive a tax rebate of 15%. After the age of 60, the good news is that any amount you withdraw is TAX FREE!
Account Based Pensions
If you are aged 60 + and retired or 65+ and still working, there are options worth considering. There are significant tax advantages in taking an Accountants Based Pension from your super. Not only are the withdrawals you make tax- free, but also the earnings within your superannuation fund are tax-free to 1.9 million dollars.
However, you must withdraw a minimum amount each year for pensions as per the table below, there are no limits on the amount you can withdraw.
The minimum amount for ages:
Under 65 is 4%
65 to 74 is 5%
75 to 79 is 6%
80 to 84 is 7%
To put in place an accounts-based pension, you will need to speak to your superannuation fund provider.
