5 Reasons Why Early Tax Planning Matters for 2025
The end-of-financial-year (EOFY) rush isn’t just stressful — it can be costly.
Early tax planning is essential for 2025 and successful businesses are positioning themselves for a stronger financial future.
Here are 5 Reasons why you need to start reviewing your financial position now:
- Missing Superannuation Deadlines.
To claim a superannuation contribution for the 2025 year for yourself or you employees, the funds must be received into your superannuation on or before 30th June 2025.
Even though the date for paying Employees Superannuation Contributions is 28th July, you can only claim a tax deduction in the current financial year if the fund receives the money on or before 30th June 2025.
With your personal contribution the same rules apply.
The maximum contribution that you can claim for the 2025 year (including employer contributions is $30,000.
Currently, if your Superannuation Total Balance, (all your funds added together) at the end of the prior financial year, is less than $500,000, and you haven’t made the maximum contributions in the last 5 years, you may be able to claim catch up contributions in the current financial year.
As an example:
Joe has a total Superannuation Balance of $425,000, he has only had the mandatory Super Guarantee Contributions into his fund in the last 5 years.
He has unused tax-deductible contributions of $75,000 in addition to the current year where he can contribute another $15,000 to super. Giving him a total of $90,000 that he can contribute.
In the 2025 Financial Year, he has sold an Investment Property, and made a taxable capital gain on the property of $200,000.
Joe contributes the $90,000 to his superfund prior to June 30th. This will reduce his taxable income by $90,000 resulting in the Capital Gain being reduced to $110,000.
| Without Additional Super Contributions | With Additional Super Contributions | ||
| Salary | $120,000 | Salary | $120,000 |
| Capital Gain | $200,000 | Capital Gain | $200,000 |
| Less Super Contribution | $90,000 | ||
| Taxable Income | $320,000 | Taxable Income | $230,000 |
| Tax Payable | $121,028 | Tax Payable | $75,206 |
| Tax Saving | $45,822 | ||
Note: The Receiving superfund will pay tax on the contributions of 15%, and a small amount that applies when you earn over $250,000 including super. In this example the tax payable by the fund would be $14,468.
Considering all taxes Joe would save $31,354 by utilising this strategy and also increasing his Retirement Savings.
But if he misses the deadline of June 30, he cannot claim the deduction in the same year as the capital gain.
- Future Investments and Borrowings.
While we love to save our clients’ money, tax planning, there needs to be a strategic approach to the future direction of the business. Rather than looking at each year in isolation and kicking the tax can down the road, long-term sustainability of the business is crucial in your planning.
What are your business goals for the next 5 Years? Do you have any major business purchases or investments to make that will help your business grow?
If you are looking to borrow funds in the next 1-2 years, you will need your Financials and Tax Returns looking good to prove loan serviceability. As the Banks will rely on these for your loan application.
Rushing out and spending money to get a tax deduction in this financial year, isn’t the smartest strategy, as it will reduce your Income and in the bank’s eyes, your loan serviceability.
Having a Plan in place for any upcoming borrowings and funding is crucial to Future Proof your business.
- Keeping Employees Engaged
Retaining employees is a growing challenge, and smart tax planning can make compensation packages more attractive without increasing costs.
From salary packaging to education benefits, there are many options. However, this is not something you can start doing at the end of June. Planning with your employees what will work for both parties takes time, and if this is something that would work for your business you need to start the process soon.
The Benefits of Employee packages:
- Improved staff retention.
- Stronger talent attraction.
- Minimal cost increases.
- Higher employee satisfaction.
- Business Structuring
Choosing the right business structure is crucial for effective tax planning in Australia, as it impacts tax rates, liabilities, and flexibility in managing profits.
Whether operating as a sole trader, partnership, company, or trust, regularly reviewing your structure ensures it aligns with your business goals and tax efficiency.
For instance, sole traders pay tax at individual marginal rates, while companies benefit from a flat tax rate (currently 25% for small businesses).
Trusts allow income distribution among beneficiaries, potentially reducing overall tax burdens. However, there are restrictions and rules around this we need to comply with.
As businesses grow, restructuring may provide advantages such as asset protection, improved cash flow, and access to tax concessions.
Reviewing your structure now, can help determine whether a change in structure could optimize tax outcomes and compliance with evolving regulations. And it could save you $$$ in tax before 30th June.
- Cashflow Implications:
Most Tax Planning Strategies will impact your cashflow.
To take advantage of this year’s immediate asset write off concession for assets purchased up to $20,000 you need the funds to purchase the assets.
If you decide to defer your income in order to save tax, you will need to plan for the reduction in cash in your business.
Making additional contributions to super, will require additional funds to contribute to your superfund.
It is vital that your business reviews your cashflow projections, to ensure there will be available cash, to implement your tax planning strategies.
Establishing a cashflow budget that accounts for tax payment timelines ensures that businesses have sufficient funds allocated for these obligations. This proactive approach prevents last minute cashflow crises and allows for strategic financial planning.