For brokers working with SMEs, understanding how to maximise small business tax deductions before the EOFY can mean the difference between a rushed filing and a smart financial strategy.
Let’s explore how small business tax deductions can help businesses improve cash flow, enhance borrowing power, and set them up for the year ahead.
Why EOFY Is A Good Time For SMEs To Look At Tax Deductions
EOFY is the one time each year when every dollar counts.
Reviewing deductible expenses before June 30 can help small businesses reduce their taxable income while making smart moves for the future.
It’s also when brokers can provide real value, by offering financial advice that extends beyond lending.
Tax deductions are available for a wide range of business costs, from office supplies to depreciation on capital assets.
Brokers who understand how to advise clients on these deductions may be better positioned to help them save working capital and maintain accurate records for future financial applications.
How Tax Deductions Can Benefit SMEs
Small business tax deductions don’t just affect what a business pays the ATO. They also shape broader financial health.
Understanding the benefits of EOFY deductions can unlock advantages for small businesses that last well into the next financial year.
Here’s a quick look at how innovative deduction strategies can impact borrowing, budgeting, and business growth.
Better Borrowing Capacity
By reducing taxable income through allowable deductions, businesses can improve their finances and boost borrowing power.
Clean records and strategic expense timing can lead to stronger loan applications.
Lenders usually look at net income and profit history when evaluating creditworthiness. Therefore, maximising deductions responsibly can put SMEs in a better position to secure funding.
Can Increase Available Working Capital
When businesses claim every eligible deduction, they may reduce their tax payable, freeing up more working capital.
That extra liquidity can be reinvested into operations, inventory, staff, or marketing.
This is especially useful for seasonal businesses preparing for a ramp-up period after EOFY.
Maximising Deductions During EOFY
EOFY is the best time for brokers to help clients manage their tax obligations.
Many small business tax deductions can only be claimed if purchases are made and records are kept before June 30.
These next steps highlight practical ways small businesses can boost their deductions while staying compliant.
Time Expenses To Be Claimable For This Financial Year
One of the easiest ways to increase deductible expenses is to bring forward any necessary purchases or payments before June 30.
This could include repairs, professional memberships, or office supplies.
The ATO allows deductions for expenses incurred in the same financial year, even if the payment was made in advance.
For example, paying for 12 months of insurance or marketing ahead of time can lock in deductions now while helping with future planning.
Brokers may want to encourage clients to look at what they plan to spend in the first few months of the new financial year and consider moving those purchases forward if cash flow allows.
Ensure SME Clients Meet Criteria For Work From Home Expenses And Running Costs
The ATO allows deductions for work-from-home expenses, but the rules depend on how the space is used and whether accurate records are kept.
Brokers should prompt clients to review these criteria carefully and ensure they use the appropriate method (e.g., fixed-rate vs. actual cost).
Confirm Eligibility For Deductions
This is where many small business tax deductions are either won or lost.
Clients who haven’t reviewed their general ledger, receipts, or payment history may miss out on eligible claims.
Brokers can help by encouraging a year-end scan of the following:
- Mobile phone and internet bills
- Training and education expenses
- Bank fees and loan interest
- Business-related travel costs
The ATO’s small business deductions list is helpful when reviewing historical records for overlooked expenses.
Record Motor Vehicle Depreciation To Support Claims
If a vehicle is used while running a business, part of its depreciation cost can be claimed as a tax deduction.
However, proper documentation is critical.
Brokers can better assist their clients by encouraging them to maintain a logbook for at least 12 continuous weeks to establish a business-use percentage.
In addition to fuel and maintenance, vehicle depreciation is another area that is often overlooked.
For example, suppose the vehicle is company-owned, not leased.
In that case, the ATO allows for depreciation under simplified rules for small businesses.
SMEs can generally apply for the instant asset write-off or general small business pool, depending on asset value and timing.
Check For Deductions For Capital Expenses And Depreciating Assets
Bigger investments, like new laptops, machinery, or commercial equipment, can also be claimed as small business tax deductions through depreciation.
Depending on asset type and cost thresholds, these may qualify for immediate deduction or be written off over several years.
Brokers may want to make sure that their clients don’t confuse personal and business assets.
Any business equipment claimed must be used primarily for work purposes. If an asset was acquired partway through the year, the deduction may be considered pro rata.
Directing clients to ATO’s depreciation and capital expenses guidelines or to a registered tax agent can help clarify which assets qualify and how to calculate the deduction.
Business-Related Software And Subscription Costs
Modern businesses rely heavily on digital tools, from accounting software to e-commerce platforms.
The good news is that most business-use software can potentially be claimed under small business tax deductions, including:
- Xero or MYOB subscriptions
- Project management tools like Asana or Trello
- Email hosting and cloud storage
- Industry-specific apps (e.g., POS systems)
Brokers can suggest combing through credit card and bank statements to identify monthly or annual software charges tied to business activities.
If software was purchased outright, depreciation rules may also apply depending on its value.
How Brokers Can Help Their SME Clients
Brokers are in a strong position to guide clients through year-end prep and offer financial strategy and support.
The right advice can lead to better cash flow, stronger compliance, and more thoughtful decision-making.
Here’s how brokers can further assist their SME clients during EOFY.
Suggest An Audit Before EOFY
Encouraging clients to do a pre-EOFY financial review is one of the most proactive services a broker can offer.
A simple evaluation of income and expenses can identify gaps, spot unused deductions, and guide year-end purchases.
It can also give clients a head start on compliance and financial planning.
Contact Accountants To Finalise Deductions
Brokers can help clarify which deductions will have the most significant impact. Bringing in accounting professionals early can be crucial for clients with multiple income streams or hybrid expenses.
Brokers can refer clients to helpful resources for deeper insights into claimable categories.
Conclusion
As EOFY approaches, brokers may want to consider tax time as a valuable opportunity to help their SME clients meet tax obligations and plan strategically.
By understanding how deductions affect cash flow, borrowing power, and compliance, brokers can deliver guidance that strengthens client relationships and unlocks business growth.
Whether it’s reminding clients to log vehicle use, reviewing software subscriptions, or connecting them with a tax professional, EOFY is the right time to act.
Properly claiming more deductions can help put a business in a stronger financial position, both in paper and in practice.
