As we move through the 2025–26 financial year, small businesses across Australia are already thinking about 30 June 2026. In Mildura, we see it every year. Harvest wraps up, tradies juggle winter workloads, and business owners finally sit down to review their numbers. That timing matters.
Tax planning is not something we leave until the last week of June. We treat it as a structured process. When we meet with clients in April and May 2026, we review profit forecasts, asset plans, and super contributions. A few deliberate decisions now can improve cash flow and reduce tax legally. The following strategies reflect current rules for the 2025–26 income year.
Choose the Right Business Structure in 2026
Your business structure affects your tax rate, asset protection, and flexibility. We review structures each year because what worked at $90,000 profit may not work at $280,000.
Sole Trader, Company or Trust: What Suits Your Current Profit Level?
Each structure has clear tax implications in 2025–26.
Sole Trader or Partnership
- Income is taxed at individual marginal rates.
- Setup and compliance costs are lower.
- Asset protection is limited.
This structure suits lower-profit or start-up businesses. Once profit increases, marginal rates can climb quickly.
Company
- Base rate entities pay 25% company tax.
- Profits can remain in the company at 25%.
- Directors receive stronger legal protection.
Earlier this year, we advised a local earthmoving contractor whose profits reached $260,000. As a sole trader, his tax bill was significant. We transitioned him to a company structure before the new financial year. Retained profits now sit at 25%, supporting equipment upgrades in 2026.
Trust
- Income can be distributed to beneficiaries in lower tax brackets.
- Trustees must document resolutions before 30 June 2026.
- Administration is more involved.
Trusts suit family businesses, provided distributions reflect commercial reality.
Structure Comparison Snapshot (2025–26)
|
Structure |
Tax Rate (2025–26) |
Asset Protection |
Key Risk Area |
|
Sole Trader |
Individual rates |
Low |
High marginal tax on profit |
|
Company |
25% (base rate) |
Strong |
Division 7A loans |
|
Trust |
Distributed rates |
Moderate–High |
Missed trust resolutions |
Confirm Registrations and Compliance in 2026
Before planning deductions, confirm compliance.
Every small business operating in 2026 should check:
- Valid Tax File Number (TFN)
- Active Australian Business Number (ABN)
- GST registration if turnover exceeds $75,000
- PAYG withholding registration for employees
We often see new employers overlook PAYG registration. Fixing that early prevents penalties and interest.
Use Timing Strategies Before 30 June 2026
Timing remains one of the most effective tax tools available.
Instant Asset Write-Off for 2025–26
Eligible businesses with turnover under $10 million can immediately deduct assets costing under $20,000 per asset, provided they are installed and ready for use by 30 June 2026.
Eligible examples include:
- Laptops and servers
- Tools and workshop machinery
- Office furniture
- Commercial vehicles (subject to car limits)
In February 2026, a plumbing business purchased:
- Two trailers at $15,000 each
- A server at $12,000
All assets were installed in March 2026. The business deducted the full cost in the 2025–26 year.
Checklist before purchasing assets in 2026:
- Confirm turnover eligibility.
- Ensure installation before 30 June 2026.
- Retain tax invoices.
- Confirm business-use percentage.
Prepay Expenses Before 30 June 2026
Small businesses can prepay up to 12 months of expenses.
Common prepayments:
- Rent
- Insurance
- Software subscriptions
- Professional memberships
- Staff training
If 2025–26 profits are strong, prepaying can reduce taxable income this year.
We tell clients, “Strike while the iron is hot.” If this year is profitable and next year looks uncertain, bring forward legitimate costs.
Manage Income Timing
Cash-basis businesses can:
- Delay invoicing until July 2026 to defer tax.
- Bring forward invoices if income is expected to rise next year.
This must reflect genuine business activity. Artificial arrangements attract ATO attention.
Maximise Deductions Without Triggering the ATO
The ATO continues to monitor over-claimed deductions in 2026. Clean records are essential.
The three deduction rules remain unchanged:
- The business incurs the expense.
- The expense relates to earning income.
- Evidence is retained.
Home-Based Business Deductions for 2025–26
Business owners working from home in 2026 can choose:
- Fixed rate method: 70 cents per hour worked.
- Actual cost method.
The fixed rate covers:
- Electricity
- Gas
- Internet
- Phone usage
Depreciation on desks and computers can still be claimed separately.
One Mildura consultant recorded 1,650 work hours at home between July 2025 and April 2026. Using the fixed rate, she claimed $1,155 plus depreciation. Accurate time records supported her claim.
Motor Vehicle Deductions in 2026
Vehicle claims remain a high-risk audit area.
You may claim:
- Fuel
- Registration
- Insurance
- Repairs
- Depreciation (up to the $69,674 car limit for the 2025–26 income year, subject to ATO updates)
You must maintain:
- A 12-week continuous logbook.
- Start and end odometer readings.
We recommend separate personal and business bank accounts. Mixing funds muddies the waters.
Superannuation Contributions Before 30 June 2026
Super contributions reduce taxable income in 2025–26, provided the fund receives the payment before 30 June 2026.
Key considerations:
- Stay within concessional caps.
- Allow clearing house processing time.
- Confirm receipt by the fund.
We advise clients not to leave this until the final week of June. Processing delays can shift deductions into 2026–27.
Small Business Income Tax Offset
Sole traders and partners with turnover under $5 million in 2025–26 may receive up to $1,000 as a tax offset. The ATO applies it automatically upon lodgement.
Essential EOFY Tasks for June 2026
Administrative discipline improves tax outcomes.
Write Off Bad Debts
To claim a deduction in 2025–26:
- The debt must be genuinely unrecoverable.
- It must be written off in your accounts before 30 June 2026.
Review your aged receivables report during May or early June 2026.
Conduct a Stocktake on 30 June 2026
Businesses holding trading stock must conduct a physical stocktake.
You may:
- Write off obsolete stock.
- Reduce damaged stock to net realisable value.
This reduces taxable income while keeping records accurate.
Finalise Trust Resolutions Before 30 June 2026
Trustees must document income distributions before 30 June 2026. Failure can result in tax at the highest marginal rate.
We have seen families lose distribution flexibility because paperwork was delayed by one day. Timing matters.
Finalise Single Touch Payroll by 14 July 2026
Employers must finalise STP data by 14 July 2026. This ensures employees can lodge accurate returns.
Avoid Common ATO Watchlist Issues in 2026
Division 7A Company Loans
If a private company lends money to shareholders without a complying loan agreement, the amount may be treated as an unfranked dividend.
To reduce risk:
- Repay loans before lodgement date, or
- Enter a complying loan agreement.
Company money is not personal money. Keep lines clear.
Separate Business and Personal Finances
We strongly recommend:
- Separate business bank accounts.
- Dedicated business credit cards.
- Reliable accounting software such as Xero or MYOB.
Digital systems create a clear audit trail and simplify BAS and EOFY reporting.
Government Incentives Available in 2026
Energy Efficiency Incentive
Eligible businesses may claim an additional 20% deduction for electrification or energy-efficient upgrades in 2025–26.
In Mildura, where summer temperatures exceed 40 degrees, refrigeration and cooling upgrades often qualify. Energy savings and tax deductions work together.
Skills and Training Boost
Eligible external training provided by registered training organisations can attract an additional 20% deduction.
Upskilling staff improves productivity and reduces tax. That is a win on both fronts.
Small Business CGT Concessions
Eligible businesses may access:
- 15-year exemption
- 50% active asset reduction
- Retirement exemption
- Rollover relief
Earlier this year, we assisted a retiring transport operator who qualified for the 15-year exemption. He sold his premises in 2026 and paid no capital gains tax. Long-term planning delivered that result.
Practical EOFY Timeline for 2026
April–May 2026
- Review profit forecasts.
- Consider asset purchases.
- Plan super contributions.
Early June 2026
- Review aged debtors.
- Draft trust resolutions.
- Conduct preliminary stock review.
Late June 2026
- Confirm assets installed.
- Ensure super contributions cleared.
- Finalise prepayments.
July 2026
- Finalise STP by 14 July.
- Prepare financial statements.
Tax planning in 2026 remains about preparation, discipline, and clarity. Small businesses that act before 30 June 2026 position themselves strongly for the next year. Those who delay often face avoidable tax bills.
We work with small business owners across regional Victoria every year. The pattern remains consistent. Early planning improves cash flow, reduces stress, and keeps you compliant with the ATO. With the right structure, accurate records, and deliberate timing, you can keep more of what you earn while building a stable future for your business.
