Get Ahead on Tax: 2025–26 Planning & Deduction Strategies

Welcome to the 2025–26 financial year! A new financial year is a fresh opportunity to get on the front foot with your tax planning. Whether you are an individual taxpayer or a small business owner, starting your tax plan early can help. It can lower your taxable income, increase your deductions, and reduce stress when June 30, 2026, arrives.

In this guide, we will explain the latest tax updates. This includes Stage 3 tax cuts and changes to superannuation. We will also share helpful strategies you can use now. By taking action from July 2025, you will follow Australian tax laws. You will also make the most of every deduction and incentive available. Let’s look at what’s new this year. We will show you how to plan ahead to save on tax legally. This way, you can avoid any last-minute rush at the end of the financial year.

What’s New for the 2025–26 Financial Year?

Staying informed on tax changes is the first step in effective planning. Here are key updates effective in FY 2025-26 that you should know:

Stage 3 Income Tax Cuts: The long-awaited Stage 3 tax reforms have kicked in, altering personal income tax brackets. As of 1 July 2024, many Australians have seen their marginal tax rates drop. For example, the former 19% tax bracket has been reduced to 16%. This means middle-income earners take home more pay, potentially giving you extra cash flow to direct into savings or salary sacrifice. Looking ahead, even further cuts are scheduled: from 1 July 2026, tax rates will be cut by another 1%, with an additional 1% cut the following year . The upshot is that over the next few years, individuals (including sole traders who pay tax on business profits) will enjoy progressively lower income tax. When planning for 2025-26, keep in mind that current rates are already lower than before and if you’re budgeting beyond this year, factor in those future rate reductions as well.

Want to dive deeper into the Stage 3 income tax cuts? Here is some further reading.

Superannuation Cap Changes: There have been significant tweaks to superannuation rules aimed at helping Australians save more for retirement (and potentially reduce their tax along the way). First, the general concessional contributions cap, that is, the limit on before-tax contributions like employer SG and salary sacrifice has increased to $30,000 per year for 2024 - 25 and remains $30,000 in 2025 - 26. This is up from the previous $27,500 cap, giving you the opportunity to put more pre-tax income into super. By sacrificing a portion of your salary or making personal deductible contributions (within this cap), you can effectively lower your taxable income (since those contributions are taxed at only 15% in the fund, rather than your marginal rate).

In addition, the general Transfer Balance Cap (TBC), the limit on how much super can be transferred into a tax-free retirement pension was indexed on 1 July 2025 from $1.9 million to $2.0 million. This benefits those nearing retirement, as you’ll be able to eventually move more money into the tax-free pension phase. Also note the Superannuation Guarantee (SG) rate (the compulsory employer contribution rate) increased to 12% from 1 July 2025 (up from 11.5% in the prior year).This higher SG rate means employers must contribute more to workers’ super, which is great for your retirement savings (though businesses should budget for the slightly higher cost). Finally, an additional super tax is on the horizon for very large balances: the government plans to impose an extra 15% tax on earnings for super balances above $3 million . This measure wasn’t law at time of writing (July 2025), but if it proceeds with a start date of 1 July 2025, it will first be calculated at 30 June 2026 . In practical terms, this only affects individuals with over $3M in super, if you’re among them, you have some time to review your strategy with a financial adviser. For most people, the main super changes to act on now are the higher contribution caps and SG rate, both of which present opportunities to save more in a tax-advantaged way.

Instant Asset Write-Off Threshold: Small businesses have had some generous asset write-off rules in recent years, but there’s a change this year. Last financial year (2024-25) featured a temporary $20,000 Instant Asset Write-Off (IAWO) for small businesses (aggregated turnover under $10m), allowing immediate deduction of assets costing less than $20k. However, that measure ended on 30 June 2025, and as of 1 July 2025 the instant write-off threshold has reverted to the normal level of just $1,000 (unless new laws extend it). In short, the days of instantly expensing big equipment purchases are (at least for now) over. If you didn’t bring forward any planned asset purchases before 30 June, don’t worry you can still claim depreciation under the small business simplified depreciation rules. Assets costing $1,000 or more will simply go into your small business pool and be depreciated (15% in the first year, 30% each year after). One consolation: if your depreciation pool balance is under $20,000 at the end of 2025-26, you can write off the whole pool in that year under current rules (this threshold was extended through 2024-25 , and is expected to continue).

Tax Planning Tip: With the threshold back to $1,000, consider spreading out purchases of multiple smaller items (each under $1,000) to get immediate deductions, or plan larger purchases strategically knowing you’ll claim them over time instead of upfront. Always check the latest at budget time, the government could announce new incentives for small business assets, but plan with the rules in place now. Now that we’ve covered the key updates, let’s look at proactive strategies you can implement from the start of the financial year. By acting early, you’ll maximise the impact of these tax changes and set yourself up for a smooth, successful EOFY.

Proactive Tax Planning Strategies for Small Businesses

Running a small business means you have unique opportunities and obligations when it comes to tax. Here are early-year strategies for business owners to reduce taxable income and avoid compliance headaches later:

1. Review Your Business Structure: As your business grows or profits increase, it’s wise to revisit whether your current structure is the most tax-efficient. Many Australian small businesses start as sole traders or simple partnerships, but these can become less optimal if your income pushes you into higher tax brackets. The corporate tax rate for small companies is 25%, notably lower than the top personal tax rate of 45%, so incorporating as a company or using a family trust structure might yield tax savings (and offer asset protection benefits) if your profits are substantial. For example, a sole trader netting $200,000 would be taxed at individual rates up to 45%, whereas the same profit in a company would be taxed at 25% (with further planning needed to extract funds).

Action: Talk to your accountant about whether a different structure could legitimately reduce your tax. Remember, changes in structure have legal and administrative implications beyond tax, so this isn’t one-size-fits-all. But early in the financial year is a good time to start the review process, as restructures take time and you’d want it in place well before 30 June if you decide to switch.

2. Plan Asset Purchases and Depreciation: With the Instant Asset Write-Off now back down to $1,000, businesses should plan capital purchases carefully. If you need new equipment or business assets, consider the timing and cost. Assets under $1,000 can be immediately deducted, so keep an eye out for any tools, office furniture, or tech upgrades that fall under that limit to claim them in full. For assets above $1,000, budget for the cash outlay knowing you’ll be claiming depreciation over a few years. Using the simplified depreciation pool, you’ll still get a decent deduction (15% of the asset cost in the first year, regardless of purchase timing) and 30% in subsequent years.

Action: Make an asset plan for the year and list any major purchases you anticipate and their expected cost. If something is close to the $1,000 mark, you might even decide to opt for a slightly less expensive model to get an immediate write-off, or time the purchase optimally. And if another generous IAWO or full expensing scheme is announced midyear, be ready to take advantage of it by having your wish list prepared.

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3. Tackle Superannuation Obligations Proactively: The Superannuation Guarantee increase to 12% means employers are contributing more, so it’s critical to stay on top of these payments. Always pay your employees’ super on time, late SG payments are non-deductible and may incur penalties. In fact, it can be smart to pay super ahead of deadlines. For instance, super for the June 2026 quarter isn’t technically due until 28 July, but paying it by 30 June 2026 will let you claim the deduction in this financial year. Regular, timely contributions not only keep you compliant but also secure your deduction. Also, take note of the super changes for employees on parental leave: from 1 July 2025, the government will pay super on Commonwealth Paid Parental Leave for the first time. If you have staff going on parental leave, this is largely handled by the government, but it’s good to be aware of the change and support your employees in understanding it.

Action: Mark all super payment due dates for the year in your calendar or accounting software. Align your cash flow so that super (and other obligations like PAYG withholding and BAS) are paid well before deadlines. Not only will this give you peace of mind and a full deduction, it also means no nasty surprises or ATO audits for unpaid super, a risk the ATO is heavily targeting with increased funding for crackdowns.

4. Conduct a Mid-Year Stocktake and Expense Review: Don’t wait until year-end to start thinking about stock and expenses. If your business carries trading stock (inventory), consider doing an interim stocktake partway through the year. This can identify slow-moving or obsolete stock early. Why does that matter? Because you might be able to write off or write down the value of dead stock, which increases your deductions. The tax law lets you value trading stock at the lower of cost or market value and if some items have become unsellable or worth much less than cost, documenting that now means you can claim a reduction in closing stock value (and thus reduce taxable income). Similarly, review your expenses regularly. Are there prepaid expenses you could make before 30 June that would be beneficial? Small businesses can often prepay up to 12 months’ worth of certain expenses (like rent, insurance, subscriptions) and claim the deduction upfront. Rather than scrambling in June, earmark those expenses now and plan the payments into your cash flow.

Action: Schedule a “financial health check” meeting with your bookkeeper or advisor mid-year (e.g. January 2026). Go over inventory, receivables (write off bad debts if any, to claim a deduction), and consider if any big ticket deductible expenses could be pre-paid before year-end. This keeps you proactive rather than reactive.

5. Strengthen Record-keeping and Systems: The start of the year is the perfect time to implement good record-keeping habits in your business. This isn’t just administrative, it can have real tax benefits. When you maintain accurate, up-to-date records of income and expenses, you won’t miss deductions that you’re entitled to. Consider using a cloud accounting software (if you aren’t already) to auto-import bank transactions and categorise them. Set up a dedicated business bank account and possibly a separate tax savings account where you deposit a portion of income for GST and tax liabilities. Good records also protect you in case of an audit you’ll have the evidence ready to substantiate your deductions. The ATO has flagged that it’s boosting compliance efforts and using data-matching to catch out businesses that under-report income or overclaim deductions. By keeping things clean and transparent from day one, you avoid drama later.

Action: Create a digital or physical filing system for receipts (e.g. snap photos of receipts and store them in a folder or app each week). If you use vehicles for work, ensure logbooks are up to date (you need a logbook kept for 12 weeks every 5 years or if usage changes). For any business use of home (home office, etc.), keep a diary of usage or designate a specific area exclusively for work. Developing these habits now means you won’t be digging through shoeboxes next June or, worse, missing out on claims because you lost the paperwork. Strong record-keeping is your best friend for both maximising deductions and staying compliant.

Stay Organised: Compliance and Record-keeping Habits to Build Now

A major theme in early tax planning is developing good compliance habits from the start of the year. Think of it as “preventative medicine” for your tax health. A little effort each month can prevent major pain at year’s end of the year. Here are some habits and tips to adopt:

Set up a Tax Calendar: Mark down key lodgings and payment dates for the year ahead. For businesses, this includes quarterly BAS due dates, monthly or quarterly PAYG withholding remittances, super guarantee due dates (usually 28 days after quarter-end), and income tax return lodgement deadline. Individuals should note things like HECS/HELP indexation (if relevant, to consider voluntary payments) and the tax return deadline (if not using a tax agent, it’s 31 October; with a tax agent it can be later). By visualising the timeline, you can avoid last-minute scrambles or penalties for missing a deadline.

Regularly Reconcile and Review: If you’re in business, reconcile your accounts at least monthly. This means ensuring your bank transactions are recorded properly in your books, and checking your profit and loss report to see how your income and expenses are tracking against expectations. Regular review can highlight issues early for example, if your travel expenses seem low, are you missing some receipts? If your gross profit margin looks off, is there revenue not recorded? For individuals, a “review” might simply be looking at your year-to-date pay slips and seeing how much tax has been withheld (useful to know if you’re on track or maybe need to adjust withholding if you have other income). Also review your super contributions mid-year to ensure you’re on pace and not accidentally over the cap due to employer contributions plus salary sacrifice.

Digitise Your Records: We mentioned keeping receipts and logs, but consider going mostly digital. The ATO’s myDeductions tool (in the ATO app) or other expense tracker apps can simplify record-keeping by allowing you to photograph receipts and record details on the go. Digital records are easier to organise and less likely to fade or get lost than paper receipts. Come tax time, you can export or share these records directly with your tax agent. For emails (like those online purchase invoices that fill up your inbox), set up a rule or folder to forward them to a dedicated “Tax” folder as they come in. This way, everything is in one place.

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Stay Educated and Updated: Make it a habit to stay informed about any mid-year tax changes or ATO announcements. Sometimes new incentives or rule changes can occur (for instance, a government might announce a bonus tax rebate or a change in compliance requirements). Subscribing to a reputable tax or business newsletter, or simply following Cordner Accounting’s blog and social media, can keep you in the loop. Being aware early means you can adjust your strategy accordingly. For example, if mid-year the ATO announces a crackdown on work-from-home claims, you’ll want to double-check you’re using the correct method and have the appropriate records before it becomes an issue.

Engage Your Tax Adviser Proactively: Rather than waiting until June 2026 or, worse, after 1 July 2026 to talk to your accountant, engage with them early on. Many accounting firms (like us at Cordner Accounting) offer planning sessions or interim check-ups. Consider booking a tax planning review for, say, November or February. In that meeting, you can project your likely taxable income and get specific advice: Should you prepay that expense? How much more could you contribute to super without breaching caps? Are you on track with PAYG instalments or will you have a big balance to pay? This proactive approach means no surprises and plenty of time to implement suggestions. Accountants can also spot issues to fix early for instance, if your record-keeping method isn’t capturing something, they can tell you now rather than finding out when doing your tax return when it might be too late to retrieve information.

By building these compliance and record-keeping habits now, you essentially “audit-proof” your year and set yourself up for maximising deductions. It’s all about consistency and not leaving things until the last minute. Speaking of which…

Future-Focused Planning: Avoid the EOFY Scramble

Picture June 2026: will you be calmly confident, with your deductions and documents all sorted, or frantically searching for receipts and rushing to make last-second decisions? The goal of early-year planning is obviously to achieve the former scenario. Here are some final forward-looking tips to ensure you don’t end up in a stressful EOFY rush:

Budget for Tax: We’ve touched on setting aside money for tax obligations, this is crucial for business owners and anyone with variable income. As you earn income through the year, always remember that a portion of it actually belongs to the ATO. Avoid the nasty shock of a large tax bill by periodically transferring funds to a “tax savings” account. This is especially important for sole traders or those who might not be covered fully by PAYG withholding. By June, you should ideally already have the funds ready to pay any tax due, rather than scrambling to find cash or set up payment plans.

Plan Your June Moves Well in Advance: Many people wake up in June and suddenly think of all the things they could do to reduce tax (like buying a car, making a super contribution, etc.). While some year-end strategies make sense, the risk of leaving decisions that late is you might do something hastily that isn’t actually optimal, or you might simply run out of time to get the paperwork done. Instead, identify by, say, May what actions you want to take by 30 June. For example, if you plan to make additional super contributions, make sure you initiate them a week or two before the deadline (super funds need to receive the money by 30 June for it to count, and transfers can take time). If you’re considering purchasing equipment or a vehicle for business, start getting quotes or financing sorted earlier in the year, so you’re not at the dealership on 29 June under pressure. Essentially, no surprises the more you can anticipate and schedule, the smoother your EOFY will be. 

Maximise Your Tax Savings Early

Use the “crystal ball” for 2026–27: Tax planning isn’t just about the year you’re in – it’s about the years ahead too. Some strategies might yield benefits over multiple years. For instance, if you expect your income to rise significantly in 2026-27 (or tax rates to change, as they indeed will with that further 1% cut), you might plan to defer some income into that year or accelerate deductions into the current year depending on what’s more advantageous. Or vice versa: if you expect to be in a lower tax bracket next year (say you plan to reduce work hours or take a sabbatical), you might want to bring forward income (like realising a capital gain this year when your rate is higher but will be offset by the lower income). Thinking these scenarios through now with the help of your accountant can lead to a deliberate multi-year tax strategy, rather than reactive year-by-year tactics. It’s like chess, planning a few moves ahead generally leads to a better result.

Keep Stress Levels Down: Lastly, a non-technical but important point: Starting early and staying organised will greatly reduce the stress often associated with taxes. It means when June comes, you’re reviewing a checklist that’s mostly ticked off, rather than starting a marathon. This peace of mind is hard to quantify but ask anyone who’s had a nightmare EOFY, it’s absolutely worth it. Plus, avoiding the EOFY scramble often means you don’t miss out, people rushing often forget to claim something or realise too late they could have done X or Y. You, on the other hand, will have been calmly executing your plan through the year and can enjoy the end of the financial year with confidence (maybe even celebrate your organisation with a little reward to yourself!).

Concluding Thoughts

The new financial year is full of possibilities, new tax cuts, new thresholds, and new chances to get it right from the start. By focusing on early-year tax planning, you empower yourself or your business to keep more of your hard-earned money (within the law) and avoid the last-minute panic that so many taxpayers experience. We’ve covered a lot of ground: from leveraging the 2025-26 tax updates (Stage 3 cuts, super changes, asset write-off rules) to concrete strategies for both businesses and individuals to reduce taxable income and stay compliant. The overarching theme is clear, be proactive, stay organised, and use the tools and allowances the tax system provides. A little effort each month beats a huge effort in June every time.

Every taxpayer’s situation is unique, and that’s where tailored advice makes a difference. At Cordner Accounting, we pride ourselves on helping Gold Coast locals (both small business owners and individual clients) navigate these tax strategies in a way that fits their specific circumstances. If you’re feeling inspired to implement some of the tips from this article (or you want to find even more opportunities specific to you), get in touch with our team. We can provide personalised tax planning advice to ensure you’re doing everything possible to minimise your tax and maximise your peace of mind. The 30 June 2026 deadline may seem far away now, but the best time to start planning is today. Contact Cordner Accounting now and let’s make this financial year your most organised and tax-efficient yet!