2026 Year-End Tax Planning Guide – Part 1

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We recommend preparing an estimate of your taxable income for the year ending 30 June 2026. This can help identify any expected tax liabilities and highlight opportunities to legitimately reduce or defer tax.

It’s also worth reviewing your current income and deductible expenses to determine whether it may be beneficial to:

• bring forward deductible expenses before 30 June; or
• defer income until after 1 July 2026 where practical.

The strategies below are general in nature and may not suit every taxpayer. Their effectiveness will depend on your personal circumstances, business structure, turnover, and accounting method (cash or accruals). Importantly, some strategies require time to implement, so early planning is essential.

Tax Planning Opportunities to Consider

1. Deferring Assessable Income

In some situations, delaying income recognition until after 30 June 2026 may reduce your current year tax liability.

Possible strategies include:

• Delaying invoicing for incomplete work until after 1 July
• Deferring receipt of income where operating on a cash basis
• Postponing receipt of lump sum payments where possible
• Reviewing whether certain passive income streams (such as rent or interest) can be delayed

Where cash flow permits, this approach may help move taxable income into the next financial year.

2. Bringing Forward Deductible Expenses

Depending on your circumstances, it may be worthwhile prepaying certain expenses before 30 June 2026 to bring forward tax deductions into the current year.

Potential deductible prepayments include:

• Superannuation contributions
• Wages, bonuses, and contractor payments
• Rent and lease costs
• Insurance premiums
• Accounting fees
• Advertising and subscriptions
• Utilities and office expenses
• Motor vehicle costs
• Repairs and maintenance
• Self-education expenses
• Home office equipment
• Donations to deductible gift recipients

Superannuation Contributions

To claim a deduction for super contributions in the 2025/26 financial year, contributions must be received by the super fund before 30 June 2026.

Some low and middle-income earners may also qualify for a government super co-contribution when making personal after-tax contributions.

Prepaying deductible investment loan interest may also be worth considering in some circumstances.

As always, tax planning should align with genuine business or investment.

3. Capital Gains Tax Planning

When selling assets, remember that the contract date — not settlement date — generally determines when a capital gain or loss arises for tax purposes.

Key CGT Considerations

• Assets held for more than 12 months may qualify for the 50% CGT discount for individuals.
• Deferring the sale of an asset with an expected gain until a later financial year may reduce current year tax.
• Capital losses can be used to offset capital gains and reduce tax payable.
• Bringing forward the sale of loss-making assets may assist where gains have already been realised.

CGT Discount Rules for Individuals

For assets acquired after 21 September 1999:

• Held less than 12 months → tax applies to 100% of the gain
• Held 12 months or more → generally only 50% of the gain is taxable

Any capital gain is assessable in the financial year the CGT event occurs. Remember also that the 2026-27 Federal Budget outlined how the Federal Government is looking to change the way CGT is assessed in future years. Make sure you are aware of these changes.

4. Accounts Payable and Accrued Expenses

Businesses operating on an accruals basis should ensure all deductible expenses incurred before 30 June 2026 are properly recorded.

This may include ensuring supplier invoices are dated on or before 30 June so the deduction can be claimed in the current financial year.

Final Reminder

Effective tax planning takes time and should be tailored to your individual circumstances. Acting early provides greater flexibility and helps avoid rushed decisions at year-end.

If you are unsure which strategies may apply to you or your business, seeking professional advice before 30 June is strongly recommended.

Instant Asset Write-Off & Temporary Full Expensing

The instant asset write-off threshold for eligible small businesses remains at $20,000 for the 2026 financial year.

To qualify for the write-off, the following conditions generally apply:

• The deduction applies to eligible plant, equipment, and motor vehicles only — it does not extend to capital improvements on buildings.
• Both new and second-hand assets may qualify.
• Assets can be purchased outright or financed.
• The business must be actively operating during the 2026 financial year.
• Aggregated annual turnover must be below $10 million.
• The business must apply the simplified depreciation rules.
• Each individual asset must cost less than $20,000.
• The asset must be installed and ready for use between 1 July 2025 and 30 June 2026.

Importantly, businesses that opt out of the simplified depreciation regime will not be eligible for the instant asset write-off, even if they meet the other requirements.

The $20,000 threshold applies on a per asset basis, meaning multiple eligible assets may be immediately deducted provided each one falls below the threshold.

Assets costing $20,000 or more can still be added to the small business depreciation pool and depreciated over time — generally at:

• 15% in the first year; and
• 30% in later years.

Additional Tax Planning Opportunities for Businesses

Stock Valuation

Before 30 June, businesses should review stock on hand and work in progress to ensure inventory is valued correctly.

Stock should generally be recorded at the lower of:

• cost; or
• net realisable value.

Where stock cannot realistically be sold for its recorded value, it may need to be written down.

Superannuation Contributions

To claim a tax deduction for super contributions in the 2025/26 year, the funds must reach the super fund before 30 June 2026.

Electronic transfers made on 30 June may not clear in time, so contributions should ideally be processed several days earlier to avoid missing the deduction.

Writing Off Bad Debts

Businesses using the accrual accounting method should review outstanding debtors before year-end.

Amounts considered genuinely unrecoverable should be formally written off in the accounting records before 30 June 2026 to claim a deduction in the current financial year.

Repairs and Maintenance

Where practical and cash flow permits, consider completing deductible repairs before year-end.

It is important to distinguish between:

• repairs and maintenance (generally immediately deductible); and
• capital improvements (typically claimed over time through depreciation).

Professional advice may be required where the distinction is unclear.

Obsolete Equipment

Old or unused plant and equipment should be scrapped, disposed of, or decommissioned before 30 June 2026 where appropriate.

This may allow the remaining book value to be claimed as a deduction.

Trust Distribution Strategies

Businesses operating through discretionary trusts may wish to consider the use of a “bucket company” to receive trust distributions as part of broader tax planning strategies.

Careful planning before year-end can create valuable tax opportunities while ensuring compliance obligations are met.