As 30 June approaches, many business owners start looking for ways to reduce their taxable income for the year. One common strategy is bringing forward deductions — but the rules around timing, particularly for prepayments, are more nuanced than they first appear.
What Does “Bringing Deductions Forward” Mean?
In simple terms, it means incurring expenses before 30 June so you can claim the deduction in the current financial year, rather than the next. This can help reduce your taxable income and potentially your tax bill.
However, not all expenses are treated equally, and timing alone doesn’t always guarantee a deduction.
Prepayments: The Key Rules
A prepayment is when you pay for goods or services in advance—for example, insurance, rent, subscriptions, or professional fees.
For small businesses (with aggregated turnover under $50 million), the rules are relatively flexible. You can generally claim an immediate deduction for prepaid expenses, provided the service period is 12 months or less and does not extend beyond the end of the next financial year.
For example, if you prepay 12 months of insurance in June, covering July through to the following June, you can usually claim the full deduction this year.
Timing Still Matters
Even where prepayments are allowed, the expense must be incurred before 30 June. This generally means you’ve committed to the liability—not just received a quote or intention to pay.
Simply planning to incur an expense isn’t enough. The transaction needs to be completed, and in many cases, paid for, before year-end.
Assets & the Instant Asset Write-Off
Asset purchases fall under depreciation rules—but for many small businesses, the instant asset write-off (IAWO) is still available for 2026.
Eligible businesses (generally with turnover under $10 million) can immediately deduct assets costing less than $20,000 per asset. This applies on a per-asset basis, so multiple purchases can qualify.
However, timing is critical. It’s not enough to order or pay for the asset before 30 June—it must be installed and ready for use by year-end to claim the deduction this year.
Assets above the threshold are still deductible, but over time through depreciation rather than upfront.
Don’t Forget Superannuation Timing
Superannuation is another common year-end strategy. Employer super contributions are only deductible when they are actually received by the fund, not when they’re accrued.
This means June quarter super (normally due by 28 July) can be brought forward and paid before 30 June to claim the deduction this financial year. However, timing is critical—payments need to clear into employees’ super funds before year-end, not just be processed.
It’s also worth noting that this is likely the last year this strategy will be relevant in its current form. With the proposed introduction of “Payday Super,” employers will be required to pay super at the same time as wages, removing the ability to manage timing around quarterly due dates.
The Bottom Line
Bringing deductions forward can be a powerful tax planning tool—but it needs to be done within the rules. Prepayments, asset purchases, and super timing can all create opportunities, but only where the timing and eligibility requirements are met.
With the right planning before 30 June, you can make the most of available deductions—without creating issues down the track.
If you’re considering year-end tax planning strategies, feel free to get in touch with our team—we can help you make the most of what’s available while staying compliant.
