Many people think EOFY tax planning is only about finding more deductions. However, without professional review, you may miss important compliance issues or planning opportunities that the ATO could flag in an audit.

Issue 1
Family Trust Distribution Tax (47% FTDT)
If your trust has made a Family Trust Election (FTE), distributions outside the nominated family group may trigger a 47% penalty tax under Section 271-15 of Schedule 2F of the ITAA 1936. This penalty generally cannot be waived by the ATO.

Potential triggers include:

• divorce or separation
• death of a beneficiary
• business restructures
• company ownership changes (even 1% outside the family group)

Important
The ATO can recover this tax for many years and general interest charge (GIC) compounds quarterly.

Hypothetical example for illustrative purposes
A $100,000 mistake from 15 years ago could become approximately $227,000 with compounding interest (actual amount varies based on GIC rates at the time).

Issue 2
Unpaid Present Entitlements (UPEs)
The Bendel decision (February 2025) held that UPEs to corporate beneficiaries may not qualify as loans under Division 7A. Trusts relying on previous interpretations may need to establish sub trusts to maintain compliance.

The ATO has increased scrutiny of discretionary trusts regarding UPEs and reimbursement agreements. If a reimbursement agreement is found, the ATO may invalidate the distribution and tax it at 47%.

Issue 3
Missed super concessions
You may be able to contribute up to $30,000 annually (or more with catch up contributions if eligible). To claim a deduction, contributions must be made and recognised by 30 June.

High income earners often miss opportunities for:

• salary sacrificing, and
• personal deductible contributions.

Potential impact
Missing these concessions could leave thousands in tax savings unrealised (actual savings depend on your marginal tax rate).

Issue 4
Income and expense timing

• Receiving income late in June may push you into a higher tax bracket.
• Prepaying eligible expenses can bring forward deductions to the current financial year.

Many businesses miss opportunities to defer income or accelerate expenses by a few days – potentially costing thousands in tax (actual savings vary by individual circumstances).

Issue 5
Capital Gains Tax (CGT) planning
Selling an asset before 30 June without planning may trigger a CGT event you could have managed.

Key considerations:

 

Important
CGT planning requires careful review of your specific circumstances and asset holding period.

Issue 6
Cash Flow Provisioning
Many taxpayers are surprised by their tax bill in July because they did not set aside funds. A planning session may help calculate your expected liability so you can provision cash flow and potentially avoid interest
charges.

Why 2026 EOFY requires extra attention
From 1 July 2026 (subject to legislation enactment):

• TFN withholding and pre-filling may mean discrepancies are flagged more quickly.
• Division 296 tax is now passed in both houses of parliament and will apply to super balances over $3 million.

Current ATO position
The FTDT GIC remission window closes 31 December 2026, after this interest remission is unlikely in most cases.

How a planning session can help
A professional tax planning session may assist you to:

• identify potential 47% FTDT exposure,
• review UPEs and Division 7A compliance,
• maximise eligible super contributions,
• time income and expenses appropriately,
• plan asset sales to potentially minimise CGT, and
• provision for expected tax bills.

Who should consider this?
You may benefit from EOFY tax planning if you:

• own a business or trust,
• earn over $120,000,
• hold investments or are planning to sell assets,
• have not reviewed your structure in 12 months, and
• have experienced major life events (marriage, divorce, death, business sale).

The bottom line
EOFY tax issues can be costly, however they are often avoidable with proper planning.

Hypothetical example
A small fee planning session could potentially save $5,000 to $50,000+ in tax and help avoid six figure penalties.

Actual outcomes vary significantly based on individual circumstances.