Smart Tax Strategies for Aussie SMEs – 15 Ways to Reduce Your Tax Bill

This article is brought to you in partnership with MYOB, a business management platform used by businesses across Australia and New Zealand. Whether you’re a sole trader or running a small business, MYOB provides tools to help with accounting, invoicing, cash flow and more.   

Understanding how to legally minimise your tax obligations is fundamental for Australian business owners. Whether you’re a sole trader just starting out or running an established SME, implementing the right tax strategies can massively impact your bottom line and help you reinvest more into growing your business. 

MYOB helps small businesses easily manage their tax and compliance. Thanks to BizCover, you can buy 1 month of MYOB and get 11 months free. Get MYOB today. 

Here are 15 proven tax minimisation approaches that could benefit your business, depending on your specific circumstances. 

1. Choose your business structure strategically 

Your business structure plays a role in determining how you’ll be taxed, making this one of the most important decisions for new business owners. Each structure offers different advantages: 

Sole trader  

As a sole trader, you’ll pay tax on business income alongside other earnings at individual marginal rates, which can reach 45% (plus Medicare levy) for high earners. 

Partnership  

Partners individually pay tax on their profit share, with the partnership itself not liable for tax. This structure allows for income splitting opportunities. 

Company  

The company tax rate is 30%, or 25% for base rate entities. Unlike other business structures, there’s no tax-free threshold for companies – every dollar earned is taxable. 

Trust structure  

Trusts offer flexibility in distributing income to beneficiaries, potentially allowing income to flow to family members in lower tax brackets. 

2. Maximise your business deductions 

Australian tax law provides numerous deduction opportunities for legitimate business expenses. Common deductible items include: 

• Business travel and accommodation costs 

• Equipment purchases and office supplies 

• Professional development and training 

• Marketing and advertising expenses 

• Insurance premiums related to your business 

For mixed-use items like mobile phones or vehicles, you can claim the business portion. For instance, if your phone is used 60% for business, you can deduct 60% of its costs. 

Keep in mind, too, that eligible small businesses with annual turnover under $5 million may claim a $1,000 tax offset, directly reducing tax payable rather than just taxable income.

3. Manage bad debts effectively

When customers fail to pay outstanding invoices, you may be able to claim these bad debts as deductions, provided the income would have been assessable and you’ve made reasonable efforts to recover the debt. 

4. Strategic income distribution through trusts

Trust structures allow trustees to distribute income strategically among beneficiaries. By allocating income to family members in lower tax brackets, you can potentially reduce the overall tax burden across the family group. 

5. Increase super contributions

Another way to reduce your taxable income is to make personal before-tax contributions to your super (contribution caps apply). 

6. Delay income collection

If you’re trying to lower your income-based tax obligations, consider postponing your invoicing to after the end of the financial year. Any money you collect after 30 June will count toward the next fiscal year. 

 

MYOB’s comprehensive business management solutions make tracking many types of financial strategies simpler. With end-to-end accounting tools designed for businesses of all sizes, MYOB helps you stay on top of your tax obligations while maximising legitimate deductions. BizCover clients can take advantage of a special offer: buy 1 month of MYOB and get 11 months free.

 7. Pay all employee super by the deadline

If you have employees, you may be able to claim a deduction for Superannuation Guarantee contributions, mandatory contributions under industrial awards, and salary sacrifice contributions—but only if the contributions are received by the fund by 30 June. 

While the official Q4 super deadline is 28 July, consider paying your contributions earlier to receive a tax deduction in the current financial year. For payments made through MYOB PaySuper, ensure they are authorised by 4pm AEST on 20 June 2025 to allow time for processing and avoid missing the EOFY cut-off. 

Learn about your obligations for paying superannuation as an employer and make managing payroll simple with this guide.

8. Claim asset depreciation

Business assets that decline in value over time may qualify for depreciation deductions. This includes: 

• Machinery and equipment 

• Computers and technology 

• Commercial vehicles 

• Office furniture and fittings 

The ATO provides depreciation schedules and rates for different asset types.

9. Make personal concessional super contributions

If you’re self-employed, you may be able to make contributions to your super out of your pre-tax income, reducing your overall tax liability and helping you plan for your financial security in retirement.

10. Optimise capital gains tax (CGT)

Consider holding investments and business assets for longer than 12 months to access the 50% CGT discount on any capital gains. This can substantially reduce your tax liability when selling appreciating assets. 

Note that CGT doesn’t apply to depreciating assets like business equipment, which are instead subject to depreciation rules.

11. Offset income with negative gearing 

As an individual, if you own a rental property with costs that exceed your profits, you may be able to deduct your losses from your taxable income. And if you know that you’ll take a loss on your rental property in the financial year, you may be able to apply for a PAYG withholding variation, which decreases your withholding throughout the year. 

12. Charitable giving as tax strategy

Donations to registered charities of cash or property could provide tax deductions while also supporting worthy causes. Ensure you obtain proper receipts and that donations are made to deductible gift recipients (DGRs).

13. Purchase private health insurance

If you earn more than $90,000 per year as a single or $180,000 as a family and don’t have health insurance, the ATO will apply a Medicare levy surcharge of 1-1.5%, depending on your total income. You won’t be subject to this charge if you carry private health insurance (the cost of which could be much less than the Medicare levy surcharge).

14. Maintain comprehensive tax records

Accurate record-keeping underpins all tax strategies.  The Australian Taxation Office (ATO) generally requires tax records to be kept for at least 5 years from the date you lodge your tax return or the date of the relevant transaction, whichever is later. This applies to both individuals and businesses for records related to income, expenses, and deductions, such as receipts, invoices, bank statements, and tax returns. 

 Consider: 

• Digital storage solutions for tax receipts and invoices 

• Regular reconciliation of business accounts 

• Documentation of business purpose for mixed-use expenses 

• Professional advice for complex transactions 

Keep in mind there are exceptions to the standard 5-year tax record rule, pertaining to: 

• Company records under ASIC. Per the Corporations Act, companies must keep financial records for 7 years after the transaction or event. 

• Amended assessments or disputes. Records must be kept for 5 years after the amendment or resolution of the dispute. 

• Future return use. If you’re carrying forward information (like tax losses), keep those records until the review period for the return that uses that info has ended.   

 15. Use accounting software

As a business owner, keeping track of all your expenses and every possible tax deduction could be difficult, but when you use accounting software, all your key financial information is stored in one place. You can also use your software to manage tax and basic reports, track GST and lodge BAS. 

Simplify tax management with the right tools – MYOB’s solutions make tax compliance easier 

Professional accounting software, such as MYOB’s solutions, is designed to remove the complexities businesses face during tax time, no matter the size of your venture. MYOB’s platform enables you to centralise your financial information, making it easier to identify deductions, track expenses, and collaborate with tax professionals.  

Now, even tiny businesses are covered thanks to the new Solo by MYOB, a business admin app designed exclusively for sole operators in Australia. The app features include invoicing, payments, expense tracking, and ATO-ready record-keeping, with more set to be delivered in 2025. 

Remember, though, that for complex tax situations, professional advice remains invaluable. The strategies outlined above provide a foundation, but individual circumstances can vary a lot. Consider engaging a qualified tax professional or accountant who can provide you with personalised advice based on your specific situation if you’re unsure about the best ways to move forward this tax time. 

Ready to streamline your business finances? BizCover clients can access MYOB’s powerful business management tools with an exclusive offer: buy 1 month and get 11 months free. Click here to claim this special partnership offer and discover how MYOB can help simplify your tax obligations while maximising your business potential. 

This content is provided in partnership with MYOB. For more information about MYOB’s comprehensive business solutions, visit myob.com or follow MYOB on LinkedIn.