How to avoid the biggest EOFY tax mistakes

Once again, the end of the financial year is upon us and some of us (ahem - me…) might be getting that nagging feeling about pulling out that box of disorganised receipts and statements ahead of tax season. With just over a week to go, I spoke to Paul Aliprandi, Senior Private Wealth Adviser for Wilsons Advisory, on his top tips for ensuring a smooth tax return at the end of the financial year and avoiding common mistakes.

It's worth noting that Aliprandi strongly encourages investors to do these things all year round. It might mean less panic about a lack of organisation at the EOFY, right? It’s worth thinking about.

He also highlights the top changes for the next financial year and the one thing he wishes investors would do for their finances.

Top 5 EOFY activities to monitor

Tax rules can be complex, so while the tips below are a helpful reminder of things to watch, speaking to experts about your personal situation can be invaluable for helping with managing the intricate details and ensuring accurate tax records and returns that comply with the rules.

1. Watch capital gains and rules around wash sales

Whether you’ve disposed of assets across the year or perhaps are thinking of selling some shares before the end of the financial year, be conscious of capital gains and be wary of “wash sales”. For the unfamiliar, a “wash sale” is where you intentionally sell at a loss, perhaps to create a tax benefit like offsetting a gain in another part of the portfolio. The ATO disallow wash sales and have strict rules regarding this.

“When you sell an asset, it should be because it no longer has a role in your portfolio, not with the intent to crystallise a loss to offset another gain and repurchase the asset in the new financial year,” Aliprandi says.

Aliprandi notes that people can be unintentionally caught out by the rules by activities like moving an asset from one account to another, such as from your personal account to your super account, so they should know the rules ahead of making decisions and report it accordingly in their tax returns.

2. Don’t forget foreign exchange gains

If you hold more than $250,000 AUD in another currency, perhaps in a term deposit or a transaction account, and you withdraw any of that money to purchase an investment, you are effectively creating a foreign realisation event (i.e. whether you’ve gained or lost money compared to the Australian dollar in that currency). Aliprandi explains that this even applies where your purchase is in the same foreign currency as your account.

“In this event, you aren’t entitled to a CGT discount. It is treated as straight income, like interest or a dividend and the tax can be high on that,” Aliprandi says.

He shares the example of a client who put money in US dollars in an account, explaining the first transaction is considered selling Australian dollars to buy US dollars, and due to fluctuations in foreign exchange, at different points when transactions are made to purchase US investments, the investor is crystallising a gain on the original AUD value or a loss. It’s something to be conscious of in terms of tax return reporting.

3. The debt deduction pitfall

“Many Australians have geared properties, and a common pitfall is overclaiming the interest deduction on the loan referrable to that property,” Aliprandi says.

He gives the example of an investor refinancing a $800,000 debt on a property to be $1 million and then using the extra $200,000 to renovate their main residence, or purchase a car or a boat. Investors often forget that the interest paid on the extra $200,000, when withdrawn in this way, is not deductible. Or alternatively, if an investor used that extra finance to pay for assorted personal expenses over time, the interest paid on those personal drawdowns won't be deductible in this circumstance either.

4. Managing situations where a property is the equity for share investments

Aliprandi explains that he has seen situations where clients use property as equity for share or managed fund investments. If they choose to sell the property but want to maintain loans for the share investments, they need to refinance these first before putting the property up for sale.

“Otherwise, the normal operation is that all your debts against a property are paid down from the proceeds and this would mean paying the debts on the shares as well. 

If you went to set up a new loan facility to reinstate the previous loan, it wouldn't be deductible and you would need to go out and purchase new assets with those funds for the debt to be deductible,” Aliprandi says.

Whether or not this is a concern depends on your finances.

5. Geared portfolios and withdrawals

“If you’ve sold some assets from a geared portfolio and used the cash to purchase something outside the portfolio, like a car, rather than reinvesting, you’ve used funds that were previously deductible and would need to reduce the debt accordingly otherwise your interest deduction would be overstated," says Aliprandi.

Other common mistakes to watch

Aliprandi notes an additional consideration to watch around property developments, commenting that one of these is the subject of a recent court case in Victoria (Morton v FCT [2025] FCA 336), which highlights the ATO's focus in this area.

If you purchase a property, the ATO will scrutinise the purpose of the acquisition, development and sale. If there is the intent of making a profit by developing it, the ATO will seek to tax that as an income gain rather than a capital gain.

Take, for example, a farmer applying to the local council to subdivide part of their property and taking active steps to establish the infrastructure, then making an arrangement with a developer to do part of the development, or where people renovate homes and sell, then repeat this multiple times.

Key changes for the next financial year

1) The transfer balance cap for superannuation is increasing from $1.9 million to $2 million

The transfer balance cap is a limit on the total amount of superannuation that can be transferred into the retirement phase. For the 2024/2025 financial year, the cap is $1.9 million. It will increase to $2 million for the 2025/2026 financial year.

Aliprandi notes that the clients this applies to will be considering how they make contributions and the potential of deferring pensions off the back of this.

2) Division 296 tax changes

From 1 July 2025 (to be confirmed), an additional 15% tax will apply on superannuation balances above $3 million to the proportion of earnings attributable to the balance above $3 million. You can read more here.

3) A focus on family trusts

While not a legislative change, Aliprandi also highlights that the ATO is focusing on family trust elections and wants to see evidence of the elections in the form of audit trails or other records. If distributions are made outside of a family group for a family trust, additional tax applies, and the ATO is concerned with monitoring that taxpayers are complying with this.

The one thing you should be doing for your finances…

As Aliprandi said to me a few years back, “records, records, records.”

He reiterates it again, “having good records that are easily accessible and reviewable by your financial adviser or accountant will allow them to manage your deductions and applicable tax, as well as ensure you are complying with other legal requirements, such as meeting minimum pension payments for the year and of course, maximising your superannuation contributions.”

On that note, it must be time to start going through the old receipts box, I suspect more than a few Livewire readers will be doing the same.