BY WEALTH ADVISER
Superannuation gets most of the attention at this time of year, and rightly so — a separate article in a recent issue covered the contribution strategies worth considering before 30 June. But super is only one side of the EOFY planning equation. Outside the super wrapper, there are decisions you can make in the next three months that may reduce your tax bill, improve the timing of your cash flows, or simply ensure you are not paying more tax than you need to.
None of these strategies require exotic structures or aggressive positions. Most involve ordinary financial decisions — selling an asset, paying an expense, timing a receipt — made with an awareness of how the tax system treats them. The common thread is that they work best when you act before 30 June rather than after it.
For context, the current income tax rates for Australian residents (2025–26 financial year) are: no tax on the first $18,200; 16 per cent on income between $18,201 and $45,000; 30 per cent on income between $45,001 and $135,000; 37 per cent on income between $135,001 and $190,000; and 45 per cent on income above $190,000. The 2 per cent Medicare levy applies on top of these rates for most taxpayers. From 1 July 2026, the 16 per cent rate is legislated to fall to 15 per cent, and from 1 July 2027 it drops again to 14 per cent — modest changes, but worth knowing if you are considering whether to bring income forward or push it into the following year.
Selling, Buying, and Timing Decisions
The most consequential EOFY tax decisions for many investors involve capital gains — and by extension, the timing of when you buy, sell, or dispose of assets.
Harvesting capital losses to offset gains. If you have realised a capital gain during the 2025–26 year — from selling shares, an investment property, or units in a managed fund — you may be able to reduce the taxable amount by selling other investments that are sitting at a loss before 30 June. The loss offsets the gain dollar for dollar, reducing the net capital gain that flows into your tax return. If your capital losses exceed your capital gains for the year, the excess can be carried forward indefinitely to offset gains in future years, though they cannot be used to reduce ordinary income.
A few things to keep in mind. The ATO takes a dim view of “wash sales” — selling an asset to crystallise a loss and then buying the same or a substantially identical asset back shortly afterwards. If the dominant purpose of the sale is to obtain a tax benefit rather than a genuine change in your investment position, the ATO may deny the deduction. If you are genuinely rebalancing your portfolio and the loss is a byproduct of that decision, the position is much stronger.
The 12-month holding rule. If you have held an asset for at least 12 months before selling it, you are generally entitled to the 50 per cent CGT discount — meaning only half of the capital gain is included in your taxable income. This is one of the most valuable concessions in the tax system for individual investors. If you are considering selling an asset that you have held for close to 12 months, it may be worth checking whether waiting a few more weeks pushes you past the threshold. The difference can be substantial: a $100,000 gain on an asset held for 11 months is taxed in full, while the same gain on an asset held for 13 months is effectively taxed on $50,000.
It is worth noting that the CGT discount is under renewed policy scrutiny following the Senate committee’s report on 17 March 2026. No changes have been legislated, and we cover the review in detail in a separate article in this issue. For now, the 50 per cent discount remains the law. But if you hold assets with significant unrealised gains, the review is a reason to have a conversation with your adviser about whether the timing of any planned disposals should be reconsidered.
Timing of asset purchases for depreciation. If you run an eligible small business using the simplified depreciation rules, assets costing less than $20,000 that are first used or installed ready for use before 30 June may qualify for the instant asset write-off, allowing you to deduct the full cost in the current year rather than depreciating it over time. This applies per asset, so multiple purchases can each qualify. The asset must be genuinely used for business purposes — the ATO expects you to demonstrate this, not merely assert it.
Bringing Forward and Deferring Income
The tax year is a fixed window, and the income that falls inside it determines your tax liability. Within reason, you have some control over which income lands in which year.
Deferring income where genuine commercial discretion exists. If you have flexibility over the timing of income — for example, if you are self-employed, run a small business, or earn income from consulting or freelance work — there may be value in deferring invoicing or receipts until after 1 July if doing so pushes income into a year where your marginal rate is lower. The legislated reduction in the lowest marginal rate from 16 to 15 per cent from 1 July 2026 is modest, but for taxpayers whose income sits entirely within the $18,201–$45,000 bracket, it represents a small saving. For most readers, the deferral decision will hinge on whether their expected income next year is materially different from this year — if you expect to earn less in 2026–27 (perhaps because of a planned reduction in work, or a move to parttime), deferring income into that lower-income year can reduce the marginal rate applied to it.
This is not about manipulation — the ATO expects income to be recognised when it is earned or received, depending on your method of accounting. But where you have genuine discretion over when work is invoiced or when a contract settles, the timing decision is legitimate.
Franking credits and dividend timing. If you hold Australian shares, the franking credits attached to dividends can reduce your tax bill or generate a refund. The timing of when dividends are paid is set by the company, not by you, so there is limited scope to shift this. But it is worth being aware of the interaction: if you are on a lower marginal rate than the company tax rate (30 per cent for large companies, 25 per cent for base rate entities), franking credits may generate a refund. If your income is unusually high this year, the value of the franking credit is lower in relative terms. Neither situation calls for dramatic action, but it is the kind of interaction worth understanding when reviewing your overall tax position.
The tax year is a fixed window, and the income that falls inside it determines your tax liability. Within reason, you have some control over which income lands in which year.
Claiming Deductions You Might Otherwise Miss
The final category of EOFY strategies involves ensuring that legitimate deductions are not left on the table — either because the expense was forgotten, because the timing was not quite right, or because the rules around prepayment were not well understood.
Prepaying deductible expenses. The ATO allows you to claim an immediate deduction for certain prepaid expenses under the 12-month rule: if the service period is 12 months or less and ends before 30 June of the following financial year, you can deduct the full amount in the year you pay it. This applies to expenses like income protection insurance premiums, professional subscriptions, interest on investment loans (subject to conditions), and for business owners, items like rent, advertising, or software subscriptions.
The key constraint is that the service period must genuinely fall within 12 months and must end on or before 30 June of the next year. If the service period is longer, the deduction must be apportioned. And the expense must have a genuine connection to producing your assessable income — you cannot prepay personal expenses and claim them as deductions.
Charitable donations. Gifts of $2 or more to registered deductible gift recipients (DGRs) are tax-deductible. There is no fixed dollar cap on deductible gifts, but a gift deduction cannot create a tax loss. For eligible gifts, you may choose to spread the deduction over up to five income years. If you are planning to make a charitable gift and have not yet done so, making it before 30 June ensures it reduces your 2025–26 taxable income. We covered the mechanics of tax-smart philanthropy in more detail in Issue 116.
Investment property deductions. If you own an investment property, the weeks before 30 June are a good time to review whether you have claimed all the deductions available to you for the current year. Common items include property management fees, insurance, council rates, water charges, repairs and maintenance (as distinct from capital improvements, which must be depreciated), and interest on the loan used to acquire the property. The distinction between a repair and an improvement matters — replacing a broken tap is a repair and deductible in full; renovating a bathroom is generally capital in nature and may instead be claimed over time under capital works or depreciation rules, depending on the expenditure. If you are planning maintenance work that is genuinely a repair, completing it before 30 June means the deduction falls into this year.
Work-related expenses. For employees, work-related expenses are deductible where you incur them in the course of producing your income and you are not reimbursed. The ATO does not require receipts for claims totalling $300 or less (though you still need records showing how you calculated the claim), but for amounts above $300, written evidence is required. If you have work-related expenses you have not yet incurred but plan to — a professional development course, a subscription, equipment for a home office — there may be value in making the purchase before 30 June rather than after.
The proposed $1,000 instant tax deduction from 2026–27. It is also worth noting that the government has announced a proposed $1,000 instant tax deduction for work-related expenses from 2026–27, but this is not yet law. It does not affect the current year, but if you are weighing up a borderline purchase, it may influence whether you bring it forward into 2025–26 or wait until the measure is legislated and takes effect.
A Note on Timing and Perspective
Tax planning is a legitimate part of managing your finances, but it works best when it serves a broader financial strategy rather than driving it. Selling an investment solely to generate a tax loss is rarely sensible if the investment itself is sound. Prepaying an expense makes sense only if you would have incurred the expense anyway. And deferring income into next year is counterproductive if it creates cash flow problems this year.
The strategies in this article are most valuable when they sit within the context of your overall financial plan — alongside the superannuation strategies covered in the previous issue, and informed by the broader tax and regulatory environment. With the federal budget due in May and the CGT discount under active review, the 2025–26 EOFY is one where a conversation with your adviser and your accountant before 30 June is particularly worthwhile.
The strategies in this article are most valuable when they sit within the context of your overall financial plan — alongside the superannuation strategies covered in the previous issue, and informed by the broader tax and regulatory environment.
Worth Thinking About
As you look ahead to 30 June, a few questions are worth sitting with.
• Have you realised any capital gains this year, and if so, are there any offsetting losses in your portfolio that might be worth crystallising?
• Are there deductible expenses you know you will incur in the next few months that could be paid before 30 June rather than after?
• If you own an investment property, have you reviewed all the deductions you are entitled to for this year — including items like depreciation schedules, insurance, and loan interest? • Is your income this year materially different from what you expect next year? If so, does that create an opportunity to time any discretionary income or expenses more efficiently?
• Have you made (or do you plan to make) any charitable donations this financial year? If not, is there a cause you would like to support before 30 June? None of these questions have a single right answer, and some may not apply to your situation at all. But they are the kinds of practical considerations that can make a meaningful difference to your tax position — and they are best addressed now, while there is still time to act.
References
1. Australian Taxation Office. “Tax rates — Australian resident.” 2025–26 income tax rates: 0% up to $18,200; 16% on $18,201–$45,000; 30% on $45,001–$135,000; 37% on $135,001–$190,000; 45% above $190,000. Legislated rate reduction to 15% from 1 July 2026. ato.gov.au.
2. Australian Taxation Office. “CGT discount.” 50 per cent discount for assets held 12 months or more by individual taxpayers; 33.33 per cent for complying super funds. ato.gov.au.
3. Australian Taxation Office. “Deductions for prepaid expenses.” 12-month rule for immediate deduction of prepaid expenses where the service period is 12 months or less and ends before 30 June of the following year. ato.gov.au.
4. Australian Taxation Office. “Claiming deductions.” Requirements for substantiation of work-related expense claims, including the $300 threshold for written evidence. ato.gov.au. 5. Senate Select Committee on the Operation of the Capital Gains Tax Discount. Final report, 17 March 2026. Examination of the CGT discount and its interaction with housing affordability and investment behaviour. aph.gov.au.
6. Moneysmart (ASIC). “Income tax.” Overview of income tax rates, Medicare levy, and deduction categories for Australian residents. moneysmart.gov.au
