One of the most underused EOFY levers — and one of the easiest to action in the last few weeks of June — is bringing forward deductible expenses you would have paid in July or August anyway. Two distinct rules apply: prepayments and the repairs-versus-improvements test.
The 12-month prepayment rule. Small business entities (aggregated turnover under $50 million) can claim an immediate deduction for prepaid expenses where the service period covers no more than 12 months and ends in the next financial year. The classic candidates are rent, insurance, software subscriptions (Xero, MYOB, Adobe, Microsoft 365), trade and professional subscriptions, and trade-association memberships. If your annual insurance renewal falls in August, paying it in late June for the next 12 months brings the entire deduction into the 2025-26 year.
The rule does not apply to capital expenditure or to expenses where the service period is longer than 12 months. So you can prepay 12 months of rent but not 18 months. You also can't prepay open-ended things like ongoing subscriptions where there's no defined end date.
Repairs versus improvements. Repairs to existing business assets are immediately deductible in the year paid. Improvements (which extend the asset's life or upgrade its capability) are capital and must be depreciated. The distinction matters because it's the difference between a $5,000 deduction this year and a $5,000 asset depreciated at 15% in year one (the simplified pool rate). Examples of repairs: replacing a section of damaged floor with similar materials, fixing a leaking roof patch, servicing a machine, repainting a workshop. Examples of improvements: replacing the entire floor with a higher-grade material, adding a new room to the building, replacing a machine with a better model. The ATO's test is whether the work restores the asset to its prior condition (repair) or improves it beyond that (improvement).
Practical EOFY moves. Get any outstanding repair work scheduled and paid in June, not July. Renew your insurance and key subscriptions early if the renewal date is in the next two or three months. Check whether your accountant has flagged any work-in-progress repair invoices that could be settled before EOFY. Pay June quarter rent and any rent arrears (the deduction rule is the year paid, not the year owed).
Cash-flow caveat. Bringing deductions forward only helps if you have the cash. Don't go into avoidable debt or overdraft to chase a deduction — the interest cost typically outweighs the tax saving unless your marginal rate is very high.