New financial year - Information SMEs need to know

With the 2025/25 financial year behind us, many SMEs are examining strategies for the first half of the 2025/26 financial year and how to head into the Christmas season confidently. As a business accountant and advisor on Sydney’s Northern Beaches, I’ve always emphasised proactive planning over reactive decision making. A significant part of my role is helping our clients formulate a forward strategy to finish the year strong, compliant, and financially healthy.

The ATO introduced temporary full expensing in 1023/24, allowing businesses with aggregated turnover up to $5B to deduct eligible assets immediately. This concession continues this financial year. For high-capital operations requiring light manufacturing, IT, fleet renewal, or fitouts, this provides tangible upgrading benefits.

Now is the time to identify and prioritise capital acquisitions. The earlier we can work on your plan, the better we can maximise cash flow and tax relief. It is also worth speaking with us about immediately expensing or depreciating assets over time. These decisions impact taxable income and how your balance sheet looks. Keep in mind that eligible assets.

Remember that eligible assets include not only machinery or vehicles but also software and digital assets. This is highly applicable to Sydney’s North Shore professional service firms.

As of 1 July 2025, the STP threshold changes. All employers, with one employee or more, must report payroll through STP phase 2. This means greater real-time visibility of income, tax withholding, and super contributions. There are actions you must take.

• Update or invest in payroll software that’s STP phase 2‑compliant, XERO, and ensure your bookkeeper or internal payroll officer is trained.
• Audit July and August payroll closely for compliance.

Use the STP data strategically. It is a helpful tool to analyse wage trends and benchmark staff overheads. This can help maximise your resource allocation for 2025.

From July 1, superannuation compliance has become more stringent. Employers face stricter penalties for late or underpaid super guarantee contributions, including potential director penalties if you’re a company. If you’re an SME with employees, ensure:

• Your payroll provider has updated super calculations to incorporate any new rates or catch‑up obligations.
• Before “super day,” conduct a quarterly super audit to ensure that all entitlements have been paid and reported accurately.

Staging payments earlier each quarter may reduce the risk of penalties for late processing.

It will be easier for SMEs conducting R&D to access R&D tax incentives. This will increase the refundable tax offset for eligible activities and smooth the application process. If your business engages in product development, digital expansion, or process improvement, now is the time to document those activities and costs. Ensure you maintain granular time sheets, project scopes, and evidence of your activities.

I recommend a mid‑year review by March 2026 to ensure your capitalised R&D is captured correctly and eligible for next year’s return.

If your business trades globally, strict transfer pricing rules and penalties exist for aggressive profit shifting. These will be enforced firmly in 2025–26. Suppose you are a branch of a foreign-owned business or are increasingly trading overseas. In that case, it is critical to establish, update, or review your transfer pricing documentation in advance of ATO reviews.

Many of our SME clients operate on real-time bookkeeping; however, conducting a formal mid-financial year close, e.g, the last week of December 2025 or the first week of January 2026, can be advantageous and uncover any oversights and help estimate full year results.

This proactive approach to your business helps you understand any tax or policy changes and provides an invaluable opportunity to review and forecast cash flow. This process enables us to revise cash flow forecasts, accounting for the full expensing of assets, super guarantee changes, and potential R&D refunds. We can identify high‑cost quarters, manage funding via overdrafts or short‑term facilities, and track the gross profit ratio and operating margins. While this may appear unnecessary oversight, our experience has shown the mid-year review to be timely and very helpful for businesses as they transition into the second half of the financial year.

As a business accountant and advisor, I ensure compliance and financial sustainability. With regular check-ins and formal reviews, we can collaborate and forecast tax exposure and minimisation opportunities, strategically time any capital expenditure, ensure compliance without surprises, and provide expert support and guidance for growth or expansion opportunities.

There is no substitute for preparation. Today is the best time to act if you need guidance on any of the above. Contact our office for a chat; we are here to help you succeed.

There is no substitute for early preparation. By aligning asset purchases, payroll, super payments, and R&D documentation within the evolving 2025–26 tax framework, your SME can preserve cash, reduce risk, and achieve stronger year-end results. If you need guidance on any of the above, reach out now—don’t wait until tomorrow. The best time to act is today.