Topic: Tax time checklist: preparing your SME for EOFY

Last reviewed: 17/12/2025

Focus: Accounting Practice Analysis

EOFY Tax Time Checklist for SMEs (Australia) 2025

Preparing your SME for EOFY tax time in Australia requires a controlled, evidence-based checklist that finalises bookkeeping, substantiates deductions, reconciles GST/BAS and payroll, values stock and assets correctly, and locks down records in line with ATO requirements—before the income tax return (and any FBT return) is prepared. The most common EOFY failures seen in practice are not “tax issues” first; they are data integrity issues (unreconciled accounts, missing invoices, misclassified private use, incomplete payroll/STP finalisation) that later create ATO audit exposure and inflated accounting costs.

Featured Answer: An effective EOFY tax time checklist for an Australian SME is to (1) reconcile all bank, GST and key balance sheet accounts, (2) confirm payroll/STP and super obligations are correctly reported and paid, (3) substantiate and review deductions (including private use and entertainment/FBT), (4) complete asset, stock and debtor/creditor reviews, and (5) compile an ATO-ready evidence file for your accountant. When executed properly, this reduces audit risk, improves cash-flow forecasting, and materially lowers year-end compliance time and fees.

What is an EOFY tax time checklist for an Australian SME?

An EOFY checklist is a structured set of accounting and tax tasks completed around 30 June to ensure your financial statements and tax positions are accurate, compliant, and fully substantiated. It is designed to align bookkeeping outcomes with Australian tax law, including the Income Tax Assessment Act 1997, ATO record-keeping requirements, and GST and PAYG rules under A New Tax System (Goods and Services Tax) Act 1999 and Taxation Administration Act 1953.

Produce reliable financial statements (P&L, balance sheet, trial balance).
Produce defensible tax workpapers (deduction evidence, reconciliations, elections, and key schedules).

When should an SME start EOFY preparation (and why does timing matter)?

SMEs should commence EOFY preparation in May and aim to finish “close” activities within 2–4 weeks after 30 June. Timing matters because ATO substantiation is far easier when documents and explanations are current, and payroll and super issues become materially harder to fix once STP finalisation and employee expectations are set.

May to mid-June: Clean-up, review, and missing document chase.
Late June: Pre-30 June planning actions (where appropriate and lawful).
1–31 July: Close, reconcile, and evidence-pack.
Post-close: Tax return and any FBT return preparation.

What are the non-negotiable EOFY bookkeeping tasks?

The non-negotiables are the tasks that determine whether the accounts are trustworthy. ATO guidance consistently emphasises keeping accurate records to substantiate income and deductions, and those records must be kept for generally five years (and longer in some circumstances). Consideration must be given to the ATO’s record-keeping expectations for businesses.

Complete these, in order:

1) Have you reconciled all bank and loan accounts to source data?

You must reconcile bank accounts and loans to ensure completeness of income and correct classification of expenses, drawings, and transfers.

Bank accounts: Reconcile to bank statements through 30 June.
Loans and finance: Reconcile closing balances to lender statements.
Undeposited funds / clearing accounts: Resolve to nil or explain.

A retail SME shows “Other income” spikes in June. Bank reconciliation identifies duplicated merchant settlements posted twice. Fixing it pre-EOFY prevents overstated turnover and downstream GST errors.

2) Have you reconciled GST (BAS) control accounts?

You should reconcile GST collected and GST paid accounts to lodged BAS figures, ensuring no period drift or coding errors.

GST on sales/purchases: Confirm correct GST treatment (taxable, GST-free, input-taxed).
BAS vs ledger: Tie lodged activity statement outcomes to ledger balances.
Adjustments: Document any Division 129 adjustments (change in creditable purpose) where applicable.

GST reporting must align to the GST law framework. Misclassifying GST-free or input-taxed supplies is a frequent ATO review trigger.

3) Have you reviewed debtors, creditors, and cut-off?

You must ensure revenue and expenses are recorded in the correct period (cut-off), particularly for accrual-based reporting.

Open invoices list at 30 June (AR/AP ageing).
Unbilled revenue (if applicable) and accrued expenses (e.g., utilities).
Prepayments (insurance, subscriptions) considered for adjustment.

4) Have you reconciled all balance sheet accounts?

Every material balance sheet account should be supported by an external document or schedule.

Wages payable / super payable
PAYG withholding payable
Loan accounts (including shareholder loans)
Intercompany / related party balances
Inventory
Fixed assets and accumulated depreciation

What payroll and superannuation steps must be completed before tax time?

Payroll is now an ATO data-matching focal point due to Single Touch Payroll (STP). Payroll errors commonly produce mismatches between wages expense, PAYG withholding, super payable, and what the ATO expects.

1) Have you finalised STP correctly?

You should finalise STP (where required) and ensure employee year-to-date figures align with payroll reports and the general ledger.

Confirm gross wages, allowances, overtime, bonuses, and salary sacrifice classification.
Validate PAYG withholding totals to ATO payment summaries/IAS where relevant.
Confirm termination payments are correctly treated.

2) Have you confirmed superannuation compliance?

You must confirm super obligations are calculated correctly and paid on time to avoid nondeductibility risks and Super Guarantee Charge exposure. ATO guidance is clear that late super can trigger Super Guarantee Charge, and deductibility outcomes can be adversely affected.

Super clearing house receipts
Fund payment confirmations
Super payable reconciliation at 30 June

3) Have you separated contractors from employees appropriately?

Worker classification must be considered carefully; misclassification creates PAYG withholding and super risks. The ATO provides extensive guidance on employee vs contractor indicators, and the legal position must be applied to facts.

What deductions and substantiation should an SME check at EOFY?

At EOFY, you are not “finding deductions”; you are confirming that claims are legally available and properly evidenced. The general deduction rule in Australian law requires a sufficient connection to earning assessable income, subject to specific limitations and substantiation rules.

Mixed-use expenses (motor vehicle, phone, home internet)
Owner drawings posted as expenses
Personal travel coded to “travel”

A trades SME codes all fuel to motor vehicle expense. EOFY review identifies one vehicle is used partly privately without a logbook method support. The correction prevents overclaiming and reduces audit risk.

2) Have you reviewed motor vehicle claims and logbooks?

Motor vehicle deductions are an ATO audit priority area. Where logbook method is used, substantiation requirements must be satisfied and records retained.

Ensure logbook is valid (and not expired) and odometer readings are captured at 30 June.
Ensure fuel/maintenance evidence is retained where required.

Identify entertainment spend (meals, functions, staff parties).
Determine whether FBT applies and whether an FBT return is required.
Ensure correct GST treatment (often incorrectly claimed).

The FBT regime is separate and technical. Entertainment and employee benefits must be reviewed against ATO guidance and relevant FBT law.

4) Have you checked instant asset write-off and depreciation treatment?

Asset treatment depends on business structure, aggregated turnover, asset type, and the applicable rules for the income year. ATO guidance changes over time and must be checked for the relevant year.

Confirm asset invoices and “ready for use” dates.
Review low-cost items incorrectly expensed vs capitalised (or vice versa).
Update depreciation schedule and reconcile to fixed asset register.

5) Have you confirmed bad debts and obsolescence decisions are documented?

Bad debts (for accrual businesses) generally require the debt to be written off as bad before year-end and proper evidence retained. Stock obsolescence write-downs should be supportable and consistent.

Debt collection notes and write-off approvals
Inventory count sheets and valuation notes
Obsolescence rationale for slow-moving stock

How should inventory/stock be treated at EOFY for tax?

If your SME holds trading stock, it must be properly valued at 30 June and supported. Incorrect stock valuation materially distorts taxable income.

Conduct and document a stocktake (or robust perpetual inventory review).
Confirm valuation method applied consistently:
Identify obsolete/damaged stock and document write-down rationale.

A wholesaler relies on “system stock” but has no stocktake evidence. ATO review risk increases because trading stock is a known taxable income lever. A documented stocktake and reconciliation substantially strengthens the position.

What year-end tax planning actions are legitimate (and which are risky)?

EOFY tax planning should be lawful, documented, and commercially supportable. The ATO expects arrangements to have substance; aggressive timing strategies without evidence elevate risk.

Bringing forward genuinely incurred expenses (with correct cut-off).
Reviewing provisioning vs accruals to ensure they are properly supported.
Completing required repairs and maintenance (distinguish from capital works).
Paying super on time and confirming correct reporting.

Large “management fees” or related party charges raised at year-end.
Sudden changes in income recognition without commercial basis.
Private expenses pushed through the business.

How do you prepare an “ATO-ready” EOFY evidence pack?

An ATO-ready pack is a structured folder (digital is acceptable) that allows your accountant to prepare accounts and returns efficiently and defend the position if reviewed.

Bank statements and reconciliation reports through 30 June
BAS lodged copies and GST reconciliation summaries
Payroll reports (YTD, PAYG, super payable reconciliations) and STP finalisation confirmation
Debtors/creditors ageing and key cut-off explanations
Fixed asset register and asset invoices
Stocktake sheets and valuation method notes (if applicable)
Loan statements and related party loan details
Substantiation for key deductions (motor vehicles, travel, home office if relevant, subscriptions, interest)
FBT working papers (if applicable)

Where related party transactions exist (especially Division 7A for private companies), separate schedules should be maintained and reviewed before lodgment. Division 7A outcomes are fact-dependent and governed by specific rules; documentation quality is decisive.

How does MyLedger improve EOFY close compared to Xero, MYOB, and QuickBooks?

EOFY close is fundamentally a reconciliation and evidence workflow problem, not a “data entry” problem. AI accounting software Australia-wide is increasingly adopted because manual reconciliation and working paper preparation are the true cost centres in compliance work.

MyLedger (by Fedix) is designed for Australian accounting practices and helps SMEs and their accountants compress EOFY close timeframes materially by automating bank reconciliation, evidence handling, and working papers.

Is MyLedger better for EOFY reconciliation than Xero?

For high-volume or messy transaction sets, MyLedger is typically better for EOFY reconciliation because it is built for AI-powered reconciliation and bulk review workflows.

Reconciliation speed: MyLedger = 10–15 minutes per client, Xero = typically 3–4 hours for complex/year-end clean-ups
Automation level: MyLedger = AI-powered auto-categorisation (around 90% immediate coding), Xero = rules and suggestions but more manual review
Working papers: MyLedger = automated working papers (including BAS reconciliation and Division 7A tools), Xero = relies heavily on external workpapers (often Excel)
ATO integration accounting software: MyLedger = complete ATO portal integration (client details, lodgement history, due dates, ATO statements/transactions), Xero = more limited ATO interactions depending on workflow and connected apps

How does MyLedger compare to MYOB and QuickBooks for EOFY evidence?

MyLedger is generally more EOFY-efficient where the bottleneck is document extraction and working paper assembly.

Document intelligence: MyLedger = AI extraction from PDFs/images/Excel for bank statements and schedules, MYOB/QuickBooks = typically manual import and manual corrections
Practice workflow: MyLedger = built for accounting practices with checklists, working papers and compliance tooling, MYOB/QuickBooks = primarily small business bookkeeping focus
Cost model (practice use): MyLedger = expected $99–199/month unlimited clients (currently free during beta), competitors = commonly per-file/per-client pricing that escalates as client count grows

What is a practical EOFY checklist you can implement immediately?

This is an implementation-grade checklist used in Australian practice.

Reconcile all bank accounts to 30 June.
Clear suspense, clearing, and uncategorised transactions.
Reconcile loan balances to lender statements.
Confirm GST coding and reconcile GST control accounts to lodged BAS.

Reconcile wages expense to payroll reports.
Reconcile PAYG withholding to ATO accounts and payments.
Reconcile super payable and confirm on-time payments.
Finalise STP where applicable and ensure classifications are correct.

Debtors and creditors ageing review with cut-off notes.
Fixed asset additions review and update depreciation schedule.
Inventory stocktake and valuation documentation (if applicable).
Related party and shareholder loan schedule review (where relevant).

Motor vehicle logbook/odometer checks.
Entertainment and potential FBT items flagged.
Large or unusual transactions explained and documented.
Ensure invoices/receipts are retained and accessible.

Export trial balance and general ledger for the year.
Export reconciliation reports and supporting schedules.
Provide notes on one-off events (insurance claims, grants, asset disposals).
Confirm business structure changes or new registrations (GST, PAYG withholding).

Next Steps: How Fedix can help your EOFY close

If EOFY close routinely becomes a July–October clean-up exercise, the workflow should be redesigned around automation and ATO-ready evidence.

Automate bank reconciliation with AI-powered categorisation (often 90% faster, 10–15 minutes vs 3–4 hours)
Reduce manual working papers by generating reconciliation and compliance schedules in one platform
Leverage deep ATO integration to pull client and lodgement data and support compliant reporting
Consolidate files, reconciliations, and schedules to reduce back-and-forth and rework

Learn more at home.fedix.ai and consider a controlled pilot on a small group of clients to quantify your EOFY time savings.

Conclusion

An EOFY tax time checklist is effective only when it produces reconciled, substantiated, ATO-defensible accounts. Australian SMEs that treat EOFY as a structured close process—bank/GST/payroll reconciliations first, substantiation second, schedules and evidence pack third—reduce ATO risk and materially lower tax-time cost and disruption. Platforms such as MyLedger (Fedix) are increasingly adopted because they automate what traditional workflows still require manual effort to complete.

Frequently Asked Questions

Q: What records does the ATO require me to keep for EOFY?

The ATO requires businesses to keep records that explain all transactions and support claims, typically for five years. Records should include invoices, receipts, bank statements, payroll records, and documents supporting asset and stock calculations. Requirements can vary by circumstance, and retention expectations may extend in some cases.

Q: What is the biggest EOFY mistake SMEs make?

The biggest mistake is lodging or handing over unreconciled accounts—especially bank, GST, and payroll control accounts—creating errors that later become expensive to unwind and can increase ATO scrutiny.

Q: Do I need to do a stocktake every year?

If your business holds trading stock, a 30 June stocktake (or robust perpetual inventory process with evidence) is generally expected to support correct taxable income calculation and valuation decisions.

Q: How do I know if an expense is deductible for my business?

An expense is generally deductible where it is incurred in gaining or producing assessable income and is not capital, private, or domestic in nature, subject to specific rules and substantiation requirements. Where mixed use exists (e.g., vehicles), apportionment and evidence are required.

Q: Can software really reduce EOFY time and accounting fees?

Yes, where the software reduces manual reconciliation, improves coding accuracy, and produces reliable working papers. For practices, AI-powered reconciliation tools such as MyLedger can compress reconciliation from hours to minutes on many files, reducing rework and improving consistency.

Disclaimer: This information is general in nature and is not financial or tax advice. Tax laws and ATO guidance change over time and outcomes depend on your circumstances. Advice should be obtained from a qualified Australian tax professional before acting.