Why December is tax strategy season

It’s also a natural point to pause and take stock. With six months of financial data behind you and six still ahead, December is an ideal time to review business performance, fine-tune personal finances, and reset the direction for the second half of the financial year.

With half the financial year complete, you have enough information to assess performance and enough runway to adjust course. It’s a time to look ahead with clarity; before the holiday lull, before the new year urgency, and before small oversights become missed opportunities.

Smart tax planning in December allows you to align your business strategy with cash flow, capital investment plans, and long-term wealth goals while you still have time to act. The earlier the review, the more flexibility you retain, and the more control you have over outcomes.

Bring forward deductions without compromising liquidity

Once your year-to-date performance is clear, December offers an opportunity to proactively manage taxable income before EOFY pressure sets in. Strategic timing of deductible expenses can help smooth income, reduce your tax position, and position your business for growth early in the new year.

Key options to consider:

• Prepay expenses where appropriate: If your cash flow allows, consider prepaying up to 12 months of costs such as rent, insurance, leases, or professional services. The deduction is brought forward into the current financial year, improving your immediate tax position.
• Use the simplified depreciation rules: Small businesses with an aggregated turnover under $10 million can claim:
  • An instant asset write-off for assets under the $20,000 threshold (as of 2024–25) (ATO, 2025)
  • A deduction for the full remaining balance of the small business pool if it falls under the threshold (ATO, 2025)
  • A 15% deduction in the year an asset is first used (for pooled assets over $20,000), followed by 30% annually in future years (ATO, 2025)
• Review compliance obligations early: Ensure BAS, PAYG, and superannuation are reconciled and lodged, and confirm any January obligations with your accountant before the holiday closure period.
• Plan for liquidity in Q3: If you’re expanding your team, investing in infrastructure, or expecting large outgoings in early 2025, weigh the benefits of bringing deductions forward against your future cash needs.

The goal is not to overspend, but to sequence deductions in line with cash flow, strategy, and flexibility. Small adjustments now can unlock meaningful efficiency at year end.

Time capital gains and losses with intent

Capital Gains Tax (CGT) strategy isn’t something to leave until June. December offers a window to assess your current position and make informed choices while there’s still time to act.

• Review unrealised positions: Assess any assets with unrealised gains or losses. Understanding your position now gives you options, not urgency.
• Align gains and losses: If you’re anticipating large capital gains next year, you may choose to defer current losses to offset future income. Conversely, realising losses now can soften an unusually high-income year.
• Maximise the 12-month CGT discount: For assets approaching 12 months of ownership, timing the sale could reduce your assessable gain by 50%. Waiting even a few weeks may unlock significant tax savings.
• Explore small business CGT concessions: Business owners may be eligible for generous CGT concessions, particularly when selling active business assets. The way these interact with your company or trust structure matters—advice here is essential.
• Coordinate with super and trust planning: Selling an asset is just one piece of the picture. A well-timed capital gain can be optimised through aligned trust distributions or non-concessional super contributions, helping preserve wealth within tax-effective environments.

Capital gains tax planning works best when events are sequenced with intent. With the right timing, your gains can support larger goals across investment, retirement, or business transition.

Reward teams while staying tax-efficient

December is an ideal time to align team recognition with tax planning, ensuring incentives serve both cultural and financial outcomes.

If you’re considering performance bonuses, it’s worth locking them in now. Bonuses that are committed to and documented before 30 June can be deductible in the current financial year, even if paid later (ATO, 2023). This timing gives you the opportunity to manage cash flow while still acknowledging contribution.

Holiday gifts, team dinners, or end-of-year celebrations can also raise questions around Fringe Benefits Tax (FBT). While many of these costs are modest, they’re not automatically exempt. The minor benefits threshold (under $300 per person, occasional and infrequent) typically avoids FBT, but it’s important to confirm how each expense is classified (ATO, 2023).

As you plan for the year ahead, incentive strategies should do more than tick a box. They can support broader workforce goals, such as retaining key staff, managing talent transitions, or building goodwill before a hiring push in January. Whatever your approach, documentation is essential. Clearly recording the nature and timing of benefits ensures both compliance and confidence.

Recognition doesn’t have to wait until the new year. With thoughtful planning, it can be both timely and tax smart.

Review trust structures and distribution planning

For family businesses that operate through trusts, December is an opportunity to review how distributions are managed and whether your current structure still supports your broader financial goals.

Start by forecasting income and estimating tax liabilities across beneficiaries and related entities. This gives you the clarity to make intentional decisions, such as whether to retain profits within the business or distribute income before the financial year ends.

If distributions are likely, ensure your trust deed is up to date and resolutions are prepared and documented in line with ATO expectations. It’s also essential to review any potential risks under section 100A, particularly where distributions to adult children or lower-taxed beneficiaries are involved. The ATO continues to scrutinise arrangements that appear to be tax-driven without a clear commercial purpose.

Good trust planning doesn’t happen in isolation. Aligning your distribution strategy with superannuation contributions, investment allocations, and overall liquidity needs ensures your structure remains flexible and fit for purpose. December gives you time to model scenarios, adjust if needed, and head into the second half of FY25 with confidence and control.

Set the pace for the year ahead

The strongest tax strategies are shaped in advance, not at the deadline. December offers a natural pause point to reflect, plan, and take action before the financial year gathers speed again. It’s a time to step back, assess your position, and consider how key decisions across business and personal finances will play out.

By using this window to model scenarios and seek advice, you gain more control over outcomes. You can approach January with clarity, ready to act with intent rather than react under pressure.

Schedule a conversation with a Capital Partners adviser to explore the opportunities available before the year resets.

References

Australian Taxation Office (ATO) 2025, Simplified depreciation rules for small business, https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/depreciation-and-capital-expenses-and-allowances/simpler-depreciation-for-small-business Australian Taxation Office

Australian Taxation Office (ATO) 2025, Capital gains tax discount, https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/cgt-discount Australian Taxation Office+1

Australian Taxation Office (ATO) 2025, Capital gains tax, https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax Australian Taxation Office

Australian Taxation Office (ATO) 2025, Small business CGT concessions, https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/incentives-and-concessions/small-business-cgt-concessions Australian Taxation Office

Australian Taxation Office (ATO) 2025, Small business support – $20,000 instant asset write‑off, https://www.ato.gov.au/about-ato/new-legislation/in-detail/businesses/small-business-support-20000-dollar-instant-asset-write-off