Tax planning is not about chasing deductions for their own sake. It is about making informed decisions before the end of the income year, so your spending, investments, business structure and cash flow support both your immediate tax position and longer-term wealth goals.
For Australians in the 2026–27 income year, the best opportunities usually come from acting early, keeping reliable records and ensuring every strategy has a genuine commercial or personal purpose. The right approach will look different for an employee with investments, a sole trader, a family business or a company owner, but the principles remain the same.
Start with a clear tax and cash flow forecast
Effective planning begins with a realistic estimate of where you expect to finish the year. Waiting until late June can limit your options, especially where contributions, trust resolutions, asset purchases or business decisions need to be completed before year-end.
1. Estimate your taxable income before making decisions
For individuals, this means reviewing employment income, bonuses, investment income, capital gains, rental property results and deductible expenses. For business owners, it also means considering sales, work in progress, stock, debtors, wages, superannuation, asset purchases and expected profits.
A forecast can help you identify whether income is likely to be unusually high or low compared with other years. That matters because the timing of deductible expenses, capital gains and contributions may produce a different result depending on your broader tax position.
A useful forecast should include:
– income already received and income likely to be received before year-end
– business expenses already paid and expected expenses
– PAYG instalments and withholding
– superannuation contributions made for yourself and employees
– investment income and capital gains
– private use adjustments for vehicles, home office costs and other mixed-use expenses
– GST, BAS, payroll and other liabilities that affect cash flow.
Tax planning should not create a cash flow problem. A deduction may reduce taxable income, but it still requires you to spend money. The commercial value of a purchase, not the tax outcome alone, should drive the decision.
2. Manage the timing of income and expenses legitimately
The timing of transactions can matter, provided the arrangement reflects commercial reality and is properly documented. For example, a business may choose to bring forward an ordinary business expense that it genuinely needs, or defer a non-essential purchase where that better suits its cash flow and operational requirements.
However, it is important not to confuse a tax plan with artificial income deferral. Income that has been derived may still be taxable even if payment has not yet arrived. Likewise, an expense is not automatically deductible simply because it was paid before 30 June.
Where appropriate, consider reviewing:
– planned repairs and maintenance
– professional subscriptions and software used in earning income
– insurance and other recurring business costs
– trading stock levels and obsolete or damaged stock
– invoices, debt collection and customer payment terms
– genuinely bad debts that may need to be written off
– work-related expenses that have a clear connection with employment income.
The general rule is straightforward: an expense must have a sufficient connection to earning assessable income and must not be private, domestic or capital in nature, unless a specific tax rule allows a deduction. Good records are essential, particularly where an item has both business and private use.
Make deductions work harder, without overspending
A sound deduction strategy focuses on expenses that are necessary, properly substantiated and useful to you or your business. It also recognises that some costs are immediately deductible, while others are claimed over time.
3. Review asset purchases and depreciation choices
Small businesses may be able to access simplified depreciation rules, including an immediate deduction for eligible assets below the applicable threshold. Eligibility depends on factors such as the business’s aggregated turnover, the depreciation method being used and the nature and cost of the asset.
Before purchasing equipment, tools, technology, office furniture or a work vehicle, ask:
– Is the asset genuinely needed for the business?
– Will it be first used, or installed ready for use, within the relevant income year?
– Is it eligible for immediate deduction or does it need to be depreciated?
– Is there any private use that must be excluded?
– Does the passenger vehicle cost limit affect the claim?
– Can the business claim GST credits, and how does that change the depreciable cost?
An immediate deduction can improve short-term cash flow, but it should not be the only reason to buy an asset. The business should still be able to afford it, use it productively and maintain it.
Employees and investors should also consider whether work-related equipment, computers, tools or income-producing assets are deductible over time rather than immediately. The answer will depend on the nature, cost and use of the item.
4. Get the basics right on work, home and vehicle expenses
Work-related deductions remain an area of close attention. Employees can claim only the work-related portion of an expense they actually incurred and can substantiate. Employer reimbursements, allowances and salary packaging arrangements each have different tax consequences.
For people working from home, a claim may be available for eligible additional running expenses or, in some circumstances, the decline in value of work-related equipment. The method used must suit the facts, and contemporaneous records are often required.
Vehicle claims also need careful handling. A vehicle used partly for work or business and partly privately will generally require an appropriate apportionment. Simply owning a ute, having a business logo on a vehicle or travelling from home to a regular workplace does not automatically make every motor vehicle cost deductible.
Use superannuation as part of your wealth strategy
Superannuation can be one of the most effective long-term tax planning tools available to Australians. It can also be one of the easiest areas to get wrong if contribution limits, timing rules and fund requirements are overlooked.
5. Plan concessional contributions carefully
Concessional contributions generally include employer contributions, salary-sacrificed amounts and personal contributions for which a deduction is claimed. The annual cap applies across relevant contributions, so business owners and employees need to consider all amounts going into super, not just the payments they arrange personally.
Depending on your circumstances, unused concessional cap amounts from earlier years may also be available. Access depends on meeting the relevant conditions, including the rules around your total superannuation balance.
For a sole trader or business owner, making a deductible personal contribution can be a practical way to manage taxable income while increasing retirement savings. For an employee, salary sacrifice may be useful where it is arranged prospectively and fits within an overall remuneration plan.
Timing matters. A contribution is generally counted when the super fund receives it, not merely when you instruct your bank to make the payment. Leaving a contribution until the final days of June creates unnecessary risk.
Before claiming a deduction for a personal super contribution, make sure you understand the notice requirements and the order in which steps need to occur. A mistake can affect the availability of the deduction.
6. Consider non-concessional contributions and retirement planning
After-tax contributions can also play an important role in building wealth inside superannuation. These contributions are subject to separate caps and eligibility rules, and some people may be able to access bring-forward arrangements where the conditions are met.
This is particularly relevant for people who receive an inheritance, sell an investment asset, downsize a home, or have surplus cash in a business or personal account. It may also be relevant when planning a transition towards retirement.
The transfer balance cap is another key consideration for people starting retirement-phase income streams. It is not a figure to assume or estimate, as an individual’s personal position can be affected by their superannuation history and indexation rules.
Superannuation strategies should be considered alongside estate planning, insurance, debt levels, family circumstances and expected retirement needs. Maximising a contribution simply because a cap exists is not always the best outcome.
Choose the right structure and handle distributions properly
Business structures influence tax, asset protection, administration, access to concessions and succession planning. The best structure is rarely determined by tax alone, but tax consequences should be understood before profits are earned, distributed or extracted.
7. Treat company money and Division 7A with care
A private company is a separate legal and tax entity. Company funds are not automatically personal funds of the shareholder, director or their family members.
Payments, loans or forgiven debts involving a private company can trigger Division 7A consequences. In broad terms, the rules may treat certain benefits provided by a private company as unfranked dividends unless an exception applies or the arrangement is put on a complying footing.
Common risk areas include:
– personal expenses paid by the company
– drawings recorded through a shareholder loan account
– unpaid amounts involving companies and trusts
– loans with no written terms or repayment plan
– private use of company assets
– year-end journals used without supporting records.
If a complying loan arrangement is required, the documentation, benchmark interest rate and minimum yearly repayment obligations need to be checked against the rules applying for the relevant income year. These are not areas to leave until the tax return is due.
Retaining profits in a company can sometimes support working capital and business growth. It does not remove the tax consequences of later extracting funds, and it should be considered alongside wages, director fees, dividends, superannuation and family cash needs.
8. Make trust distributions deliberate, documented and genuine
A discretionary trust can provide flexibility, but only where the trust deed permits the proposed distribution and the trustee follows the deed correctly. Decisions about trust income and capital generally need to be made before the end of the income year, with valid records prepared at the time.
A distribution should not be treated as a paper exercise. The beneficiary’s entitlement, the flow of funds and the use of those funds all matter. Arrangements where income is appointed to one person but the economic benefit is directed to someone else can create significant tax risk.
The ATO has made it clear that trust arrangements involving reimbursement agreements and certain adult-child, corporate beneficiary or circular funding arrangements may attract scrutiny. Good tax planning in a trust means understanding the commercial and family reasons for the distribution, not simply selecting the lowest-taxed beneficiary.
Plan ahead for investments, sales and business exits
Some of the largest tax outcomes arise from the sale of an investment, property, business asset or ownership interest. These transactions often need planning well before a contract is signed.
9. Manage capital gains before you sell
A capital gain may arise when you dispose of shares, investment property, business assets or certain rights. For many asset sales, the tax timing is determined by the contract date rather than settlement, which can make last-minute planning difficult.
Before selling, review:
– the expected gain or loss
– the acquisition history and records of ownership costs
– whether capital losses are available
– whether the asset has been held long enough to qualify for any general discount
– whether the main residence rules may apply
– whether the asset has been used partly for income-producing purposes
– whether a change in ownership structure would create tax consequences of its own.
Business owners should also consider the small business CGT concessions well before a sale. These concessions can be valuable, but access depends on satisfying detailed conditions. The rules may involve turnover, net asset value, active asset use, connected entities, affiliates and ownership tests.
A business restructure carried out shortly before a sale should never be assumed to be tax neutral. The sequence of events, commercial rationale and documentation can be critical.
10. Review stock, debts, fringe benefits and GST before year-end
Smaller year-end items can have a meaningful cumulative effect. For businesses, this may include reviewing trading stock, work in progress, unpaid invoices, bad debts, employee benefits and GST coding.
A debt generally needs more than a vague concern about non-payment before it can be treated as bad. The business should have evidence of the collection steps taken and must ensure the debt is properly written off where required.
Fringe benefits tax can arise where employers provide benefits to employees or their associates outside normal salary and wages. Cars, entertainment, loans, reimbursement of private expenses and other benefits can all require review. A benefit that seems minor in isolation can create administration and tax costs if it is not identified early.
GST also deserves a health check. Reconcile BAS reporting to accounting records, ensure income and expenses have been coded correctly, and review whether input tax credits have been claimed only to the extent the acquisitions relate to creditable business purposes.
A practical example: planning before it becomes urgent
Consider a business owner whose profits are stronger than expected during the year. Rather than rushing into unnecessary spending in June, they meet with their accountant several months earlier.
Together, they review expected taxable income, cash reserves, outstanding customer invoices, equipment genuinely needed for the business, employee superannuation obligations, the director loan account and the trust deed. They also identify a potential future sale of a business asset and start gathering records well before any contract is signed.
The result is not necessarily the largest possible deduction for the year. It is a more orderly plan that supports cash flow, reduces avoidable compliance risks and gives the owner clearer choices about reinvesting in the business, paying themselves, contributing to superannuation or preparing for a future exit.
Build your plan around the decisions that matter
The most effective tax planning is proactive, lawful and connected to your wider financial goals. Forecast income early, claim only genuine deductions, use superannuation thoughtfully, keep business and personal finances separate, document trust decisions properly and plan major asset sales well ahead of time.
Tax rules, contribution limits and business circumstances can change, so a strategy that worked last year may not be appropriate for 2026–27. Speaking with can help you assess the opportunities and obligations relevant to your circumstances before year-end decisions become time-critical.
This article is general information only and is not personal financial or tax advice. Before acting, speak with a registered tax agent or accountant, such as, about your specific circumstances.