Tax time preparation: Steps to get your business ready for EOFY

Published Monday 24 August 2026

Table of contents

• What is tax time in Australia?
• How to prepare your small business for tax time
• Tax planning tips to maximise your return
• How to set up your business for the new financial year
• Get your business finances sorted for tax time
• FAQs on tax time preparation

Key takeaways

• The Australian financial year ends on 30 June, and starting your tax time preparation early helps you maximise deductions and avoid last-minute stress.
• Organise your financial records, reconcile your accounts, and review eligible deductions before the end of financial year (EOFY) deadline.
• Complete compliance tasks on time, including finalising Single Touch Payroll (STP), lodging your Business Activity Statement (BAS), and paying superannuation.
• Since 1 July 2026, Payday Super has required employers to pay super at the same time as wages – if you haven't adjusted your processes yet, do so now.

What is tax time in Australia?

Tax time preparation for small business owners begins well before the end of the financial year. The Australian financial year runs from 1 July to 30 June 2027, and the period between April and October is when most businesses need to finalise their records, claim deductions, and lodge returns.

Whether you're a sole trader, freelancer, tradie, or consultant, getting organised before 30 June 2027 puts you in a stronger position. You'll have more time to identify deductions, fix errors, and avoid penalties for late lodgement.

Tax time applies to every business structure, including sole traders, partnerships, companies, and trusts. Even if you're self-employed with no staff, you still need to report your income and claim your deductions correctly.

When does tax time start and end?

The key dates to mark in your calendar follow a clear timeline across the financial year.

• 1 July 2026: The 2026-27 financial year begins.
• 30 June 2027: The financial year ends. This is your deadline for prepaying expenses, writing off bad debts, and making super contributions you want to claim in this year.
• 14 July 2027: Deadline to finalise your STP data with the Australian Taxation Office (ATO).
• 31 October 2027: Deadline to lodge your tax return if you're self-lodging through myTax.

If you use a registered tax agent, you may be eligible for an extended lodgement deadline. Check with your agent early to confirm your specific due dates.

How to prepare your small business for tax time

Preparing for tax time doesn't need to be overwhelming. Breaking the process into steps makes it manageable, even if you're doing it for the first time. Here's how to work through your tax time preparation.

1. Get your financial records in order

Good records are the foundation of a smooth tax return. Start by gathering everything you need in one place.

1. Collect all income records, including invoices you've issued and payment confirmations.
2. Gather expense records such as receipts, supplier invoices, and bank statements.
3. Check that your accounting software matches your bank transactions. If you're using cloud accounting with automatic bank feeds, this process is much faster.
4. Organise any paper receipts you haven't digitised. The ATO's myDeductions app is a free tool for tracking deductions on the go.

The ATO requires you to keep most business records for five years. Digital copies are accepted, so consider scanning and storing paper documents in a secure cloud-based system.

2. Reconcile your accounts

Reconciliation means checking that the transactions in your accounting records match your actual bank statements. It's one of the most effective ways to catch errors before they become problems.

1. Run through each bank account and credit card to confirm every transaction is recorded and categorised correctly.
2. Review your Goods and Services Tax (GST) coding. Make sure GST-free items aren't coded as taxable, and vice versa. Incorrect GST coding can lead to errors on your BAS lodgement.
3. Check your accounts receivable for any outstanding invoices. Follow up on overdue payments before 30 June 2027.
4. Review accounts payable to confirm all bills are recorded, even if they haven't been paid yet.

If you have any debts you're unlikely to collect, write them off before 30 June 2027 so you can claim them as a deduction in this financial year.

3. Review your business deductions

Deductions reduce your taxable income, so it's worth spending time to make sure you're claiming everything you're entitled to. The key rule is that a deduction must be directly related to earning your business income.

Common deductions for sole traders and self-employed workers include:

• Home office expenses: If you work from home, you can claim a portion of your electricity, internet, phone, and office furniture costs.
• Vehicle expenses: You can claim travel between work sites, to meet clients, or to collect supplies. Keep a logbook or use the cents-per-kilometre method.
• Equipment and tools: Items used for your business, from laptops to power tools, are deductible. Assets costing less than $20,000 can be immediately deducted under the instant asset write-off, now a permanent feature from 2026-27 onward.
• Professional development: Courses, conferences, and subscriptions that relate to your current work are deductible.
• Insurance premiums: Business insurance, income protection, and professional indemnity premiums are all claimable.

The $20,000 instant asset write-off applies per asset, not as a total cap. If your business has an aggregated turnover under $10 million, you can write off each eligible asset that costs less than $20,000 in the year you first use it or install it ready for use. This is a useful way to bring forward deductions if you need new equipment before 30 June 2027.

Three rules apply to every deduction:

1. The expense must be directly related to earning your business income.
2. If an expense is partly personal and partly business, you can only claim the business portion.
3. You must have records to prove the expense, such as a receipt, invoice, or bank statement.

Consider prepaying some expenses before 30 June 2027 if it makes financial sense. For example, paying your next quarter's insurance premium early can bring that deduction into the current financial year.

4. Meet your superannuation obligations

Superannuation obligations are a critical part of tax time preparation, whether you have employees or you're self-employed.

The super guarantee rate is 12% for 2026-27, with no further legislated increase. Payday Super has been in effect since 1 July 2026. Under these rules, employers must pay super at the same time as wages, rather than quarterly.

The ATO's Small Business Superannuation Clearing House (SBSCH) closed on 1 July 2026 – if you haven't already switched, move to an alternative clearing house or payroll software that handles super payments directly.

If you're self-employed with no employees, you're not legally required to pay yourself super, but doing so can provide significant tax benefits. Personal super contributions up to the concessional cap are taxed at 15% inside the fund, which is likely lower than your marginal tax rate.

Read more about your superannuation compliance obligations to make sure you're meeting all the requirements.

5. Complete your compliance tasks

Several compliance deadlines cluster around the end of the financial year. Missing them can result in penalties, so add these to your calendar.

1. Single Touch Payroll (STP) finalisation: If you have employees, you need to make a finalisation declaration through your STP-enabled software by 14 July 2027. This tells the ATO that your payroll data for the year is complete and accurate.
2. BAS lodgement: Lodge your final BAS for the financial year on time. If you're on quarterly BAS, your June quarter statement is due by 28 July 2027. Check the ATO's Tax Time toolkit for the latest deadlines specific to your reporting cycle.
3. PAYG withholding: Confirm that all Pay As You Go (PAYG) withholding amounts have been reported correctly through STP throughout the year.
4. Fringe Benefits Tax (FBT): If you've provided fringe benefits to employees, your FBT return is due on 21 May 2027. If you missed it, lodge as soon as possible to minimise penalties.

6. Lodge your tax return

Once your records are reconciled, deductions reviewed, and compliance tasks complete, you're ready to lodge your tax return.

The process differs slightly depending on your business structure. Sole traders report business income in their individual tax return. Companies and trusts lodge separate returns with different schedules and requirements.

If your situation is straightforward, you can self-lodge through the ATO's myTax portal. The deadline for self-lodged returns is 31 October 2027. For anything more complex, especially if you have investment properties, multiple income streams, or are unsure about deductions, working with a registered tax agent is worth considering. Agents often have extended lodgement deadlines and can help you identify deductions you might miss.

When meeting with your accountant or tax agent, bring your income summary (check your STP income statement pre-fill in myTax), bank statements for all business accounts, records of business expenses and deductions, details of asset purchases or disposals, superannuation contribution records, and your prior year tax return for reference.

A general guideline for sole traders and self-employed workers is to set aside 25 to 30% of your profits throughout the year for tax obligations. This covers income tax and any GST or super liabilities, and helps avoid a large bill at tax time.

Tax planning tips to maximise your return

Beyond the essentials, a few planning strategies can help reduce your tax bill and set your business up for a stronger year ahead.

• Time your income and expenses around 30 June 2027. If you can, delay invoicing for work completed in late June until July so that income falls into the next financial year. Similarly, bring forward deductible expenses by paying them before 30 June 2027.
• Contribute to super for tax benefits. Even if you're self-employed, making concessional super contributions reduces your taxable income. Contributions are taxed at just 15% inside the fund.
• Review your business structure. As your business grows, the structure that made sense at the start might not be the most tax-effective now. Speak with an accountant about whether a company or trust structure could offer better outcomes. The base rate company tax rate for small business entities (under $10 million aggregated turnover) is 25%.
• Check if you qualify for the small business tax offset. Sole traders and partners in a small business may be eligible for a tax offset of up to $1,000, which directly reduces the amount of tax you owe.
• Carry forward any tax losses. If your business made a loss this year, you may be able to carry it forward to offset future profits. This can reduce your tax in future years when your business is more profitable.

How to set up your business for the new financial year

Use the end of the financial year as a prompt to strengthen your processes and set clear goals for the year ahead.

1. Review your profit and loss statement, cash flow, and balance sheet for the year. Identify what worked, what didn't, and where you want to improve. Set clear financial goals for the 2027-28 year.
2. Update your budget and cash flow forecast using the data from this year. Factor in any known changes to expenses, pricing, or revenue streams. If you have employees, remember Payday Super means super payments come out of your cash flow every pay cycle now, not quarterly.
3. Confirm your Payday Super setup is working smoothly if you employ staff. Since this shifted to every pay cycle, make sure your payroll system is keeping up and there are no gaps in your process.
4. Review your insurance and registrations. Check that your business insurance covers your current operations and revenue. Confirm your ABN, GST registration, and any licences are up to date.
5. Set up your accounting system for the new year. Roll over your accounts, update tax tables, and make sure your software is ready to handle any legislative changes for the 2027-28 financial year. The business.gov.au EOFY checklist is a useful reference to make sure you haven't missed anything.

Get your business finances sorted for tax time

Keeping on top of your finances year-round makes tax time preparation simpler and less stressful. Xero brings your income, expenses, bank transactions, and reporting into one place, so you're not scrambling to find records when the financial year ends.

With automatic bank feeds, real-time reconciliation, and built-in BAS and STP reporting, you can stay on top of your obligations throughout the year. Automated invoice reminders help you chase payments, and expense tracking keeps your deductions organised as you go.

Get one month free and see how cloud accounting can take the stress out of tax time.

FAQs on tax time preparation

Here are answers to common questions about preparing for tax time as an Australian small business.

Do I need a tax agent, or can I lodge my own return?

If your business is straightforward with a single income stream and standard deductions, you can self-lodge through the ATO's myTax portal by 31 October. For more complex situations involving multiple income sources, investments, or trust structures, a registered tax agent can help you maximise deductions and may offer extended lodgement deadlines.

Can I claim the instant asset write-off for my small business?

Yes, if your business has an aggregated turnover under $10 million and the asset costs less than $20,000. The asset must be first used or installed ready for use within the financial year you're claiming it, and items used partly for personal purposes can only be written off for the business-use portion.

What is Payday Super and when does it start?

Payday Super has required employers to pay super contributions at the same time as wages since 1 July 2026. If you haven't yet adjusted your payroll processes, this is now a compliance requirement, not a future change.

How do I finalise Single Touch Payroll?

Log in to your STP-enabled payroll software and make a finalisation declaration for each employee, confirming that payroll data for the financial year is complete. The deadline for STP finalisation is 14 July each year.

When is the deadline to lodge my small business tax return?

If you self-lodge through the ATO's myTax portal, the deadline is 31 October 2027. If you use a registered tax agent, you may have an extended deadline; check with your agent for your specific due date.