As we commence the new financial year, I am pleased to share news of some well deserved staff promotions at Holman Hodge and a new, executive appointment to our leadership team.

At Holman Hodge, we’ve always believed that great advice begins with great people, and we’re proud to invest in our team as they grow in experience and leadership. As a result, I’m pleased to share several internal promotions that reflect the depth of talent we have across our firm:

• Krista Fenix has been appointed to Associate Director, recognising her leadership and commitment to our clients
• Emma Burman, Peter Carosi and Jacob Prestia have been promoted to Senior Managers, reflecting their dedication to technical excellence and team leadership
• Madison Carnegie-Smith has been promoted to Assistant Manager, recognising her growing responsibilities and consistently high quality work.

I am also delighted to welcome Leanne Latz to our leadership team as General Manager of Holman Hodge and Next Workspace. An accountant by profession, Leanne joins us from the healthcare sector, where she brings valuable experience as a finance and operations lead. I am looking forward to her working in partnership with me, as Managing Director, and further developing our operational management as we continue to grow.

Please join me in celebrating these promotions and appointments. I am very proud of what our team has already achieved and look forward to their continuing success.

Kind regards,

Paul Holman
Managing Director

As 30 June rapidly approaches, pharmacy owners should be actively reviewing their business and preparing for year-end obligations. Beyond the usual tax considerations, pharmacies face a unique mix of operating and accounting complexities that require a tailored approach. At Holman Hodge, we work closely with pharmacy clients and understand the critical role that clean, accurate reporting plays in presenting a true picture of your business to stakeholders, including banks.

Here are key focus areas for pharmacists to ensure a smooth and successful end to the financial year.

Stocktake
Performing a stocktake at year-end is essential, not just for compliance but for operational insight. Pay special attention to negative stock balances. These typically indicate system errors or data entry issues and can distort both profit and inventory valuation.

For a clean stocktake:

• Ensure physical counts align with system data.
• Investigate and correct negative stock positions.
• Identify and write off expired, damaged or slow-moving stock.

Choosing the appropriate valuation method (cost, market value, or replacement) is also crucial for consistent financial reporting.

As we close up the end of another financial year, please remember to run a Stock on Hand and Owing Scripts report as at 30 June 2025. The report should be run before trading on the 1st of July 2025.

Review Debtors
Pharmacy owners should closely review their Shop accounts and debtor ledgers, especially amounts owed from PBS (Pharmaceutical Benefits Scheme) accruals, before 30 June. These can materially affect your reported operating profit. Inaccurate debtor records, particularly over or under reporting of PBS accruals may lead to misleading financial performance metrics. This has the potential to impact your ability to meet bank covenant requirements, especially when profit-based metrics are tested.

Take the time now to validate debtor balances and ensure reporting reflects actual receivables.

Review Creditors
As with debtors, aged creditor listings should be reviewed for accuracy. Misstatements in liabilities can distort your business’s working capital position and again lead to misleading financial ratios used in banking or valuation scenarios.

Verify all supplier statements, follow up on any long-outstanding amounts, and ensure your creditor balances reflect only real, payable obligations.

Inter-Store Transfers
Multi-store operators should review and reconcile all inter-store transfers. Unreconciled or incorrect transfers between locations can result in double-counting or under-reporting of stock, skewing profit margins across stores.

Establish a formal process to review these transfers and ensure all records are current and accurate before 30 June.

Payroll Tax
With pharmacy staffing levels on the rise and wage increases flowing through, many owners may be edging closer to payroll tax thresholds, especially if operating across multiple locations or under related business structures.

Each state and territory in Australia has its own payroll tax threshold, ranging from around $900,000 to over $2 million, depending on the jurisdiction. If your total Australian wages exceed the applicable state threshold, you may become liable for payroll tax, even if your business has not previously been subject to it.

Key considerations:

• Review your total wages paid, including superannuation and certain contractor payments.
• Consider if any grouping provisions apply (e.g. related entities under common control).
• Plan ahead for any future wage growth or staffing changes that may tip you over the line.

At Holman Hodge, we help pharmacy owners understand whether they’re at risk of crossing a threshold and develop proactive strategies to manage and, where appropriate, mitigate their payroll tax exposure. This might include reviewing business structures, reallocation of wages, or exploring legitimate grouping exemptions.

If you’re unsure of your position, now is the time to review it before the new financial year begins.

Don’t Forget General Tax Planning
In addition to pharmacy-specific tips, make sure you’re across broader year-end tax planning strategies.

We’ve outlined these in our recent insights:

• Tax Planning Tips for EOFY 2025
• Superannuation Cut-Off Dates

From superannuation contributions and asset write-offs to prepaid expenses and trust resolutions, these checklists are critical to maximise your tax outcomes and avoid any costly oversights.

How we can help?
If you’d like help reviewing your pharmacy’s records ahead of 30 June or want an estimate of your tax position, please reach out by contacting your Holman Hodge advisor directly. Clean data is not just about compliance, it protects your business reputation, supports decision making, and ensures financial reports are truly reflective of operational performance.

About the author
Jacob Prestia is a Manager at Holman Hodge. He understands that his work with pharmacy clients encompasses much more than just the figures presented in compliance and management reports. He fosters personal relationships that extend to providing advisory services on critical matters such as restructures, cash flow management, and transactions, in addition to supporting clients in areas like property ownership, syndication, and development.

How would you feel if you paid double what a pharmacy was really worth? It’s a question that zeroes in on why due diligence matters.

Buying a pharmacy business is a big step, full of uncertainties and unknowns. One of the ways to bring more certainty to a transaction is in undertaking due diligence. It’s something that we talk about all the time and support many, many clients to undertake in support of their purchase decisions. But what exactly is it and why is it so important?

According to the Oxford Dictionary, the definition of diligence is “careful and persistent work or effort”. When you add ‘due’ to coin the phrase ‘due diligence’, it becomes a legal term which involves taking reasonable steps to avoid committing a tort or offence. When applied to buying a business, due diligence involves a comprehensive appraisal of the business to establish its assets, liabilities and evaluate its commercial potential.

Like any investment, it’s important to be sure of what you are paying for AND that you’re paying a fair price. Due diligence is a way to dot your i’s and cross your t’s.

The process of due diligence involves taking a closer look at the numbers, agreements and operations of the pharmacy business. At Holman Hodge, we work with pharmacy owners and prospective owners to guide the process, which often comes down to knowing the right questions to ask, who you seek advice from and weighing up if this is the right step for you.

Asking the right questions

At Holman Hodge, we work with pharmacy owners and prospective buyers to guide them through the due diligence process. Having a specialised understanding of pharmacy business at the granular and industry level, means that we can assist in translating anomalies and in gaining a greater understanding of what is being offered for sale. We know the right questions to ask to flesh out the details, so here are a few pointers:

1. Financials
   1. Ask for at least the last three years of Accountant prepared financials to understand the numbers as well as year to date management reports.
   2. Review alongside POS (Point Of Sale) reports to cross check and understand the components of the business that are retail versus dispensary.
   3. Assess the pharmacy’s performance and profitability against industry benchmarks. This includes identifying anomalies in the information (including unexplained significant improvements in recent performance).
2. Lease agreements
   1. Location is a very important factor in a pharmacy’s success and lease costs are amongst the biggest expenses.
   2. What are the lease terms, when does it expire and what renewal terms are there? Security of the long term tenure is very important.
   3. Identify risk of additional competitors
3. Sources of income
   1. Ask for a ‘Top doctors’ report to identify where the scripts are coming from. Are there risks associated with the current relationships if there is a new owner?
   2. What contracts are in place with nearby facilities, such as aged care or nursing home providers? Review the contracts, termination clauses and renewal terms.
4. Staffing
   1. Review the roster and wage costs. Do they align with the pharmacy’s performance?
   2. What are the employee entitlement balances? Are there any key staff you risk losing from a change of ownership?
   3. What’s the culture like and the staffing mix?
5. Owner involvement
   1. What is the current owner’s role in the pharmacy and how might this impact ongoing relationships and operations?
   2. Have the current owners been working fulltime and drawing a salary? This impacts profitability.
6. Stock levels
   1. What is stock valued at and does this reflect current pricing and turnover?
   2. Are you buying old, slow-moving stock?

The answers to these questions shouldn’t be taken at face value. They are better understood by undertaking a SWOT analysis of the pharmacy business – Strengths, Weaknesses, Opportunities and Threats. This will take into account the pharmacy’s location, competitors, suburb growth, GP relationships, and industry factors such as Medicare, 60 day dispensing, and relevant programs and incentives which the pharmacy may be entitled to.

One such example is from a buyer who approached us to purchase their first pharmacy with a proposed value based on the pharmacy’s eligibility to the Regional Pharmacy Transition Allowance (RPTA) program which certain rural pharmacies have access to. After engaging us, we discovered that the pharmacy wasn’t eligible due to several factors misrepresented by the vendor.  This resulted in the business being overvalued by as much as $400,000 and gave the buyer great insight into the true value of the business.

Another buyer approached us after placing an offer based on a valuation of over $4m. When we undertook the usual due diligence, which included comparing the business’ financials with their POS reports, we found that the pharmacy was valued based on the group turnover, not the single pharmacy that was for sale. This meant that the reported sales, and therefore valuation, was overstated by more than a million dollars.

Who should be involved in the pharmacy sale process?

When considering purchasing (or selling) a pharmacy, there are a number of experts you can rely on, and they each play a different role:

• Accountant – to conduct due diligence, ensure financial accuracy and a ‘sense check’ on the numbers (in line with the questions we have raised in the previous section)
• Broker – can assist in finding potential buyers and business valuation
• Lawyer – reviewing and setting in place the paperwork, lease, contracts and agreements
• Valuer – valuation of the business, usually for lending purposes, and valuation of stock
• Banker (or finance broker) – to secure funding (usually based on the due diligence findings).

It’s also important to ensure you have the right balance and the right team supporting you throughout this process. We had a case where the buyer relied solely on legal advice, without involving the other parties until closer to the end of negotiations. When we stepped in to undertake due diligence, we identified that the advisor they had engaged was managing items outside of their area of expertise. This resulted in an over-lapping of duties and additional unnecessary costs for the buyer.

A final tip

Buying a pharmacy is a big move and should be considered as such. Come to us early. We’ll help you to understand the process, what you are buying and ensure that your offer reflects a fair value. From a statutory, compliance and financial point of view, we know what to look for.

We know our numbers, we know pharmacy and what makes sense.

Pharmacies are unique businesses. We’ll work with you to ensure  that your investment is sound and you’re set up for success from day one.

About the Authors

Krista Fenix and Serry Leombruno work in our Pharmacy Team to support pharmacies around Australia.

Krista is a Manager at Holman Hodge. She works with over a dozen pharmacies and has built a close affinity with retail and hospitality clients too. Personal experience working in a multigenerational family business and as a qualified Family Business Advisor brings a valued perspective to pharmacy clients, particularly those entering or exiting an ownership group.

Serry Leombruno is an Assistant Manager. He works with a stable of pharmacy clients, supporting tax and compliance, management accounting and advisory around matters such as restructures, cashflow and transactions. Coming from commerce, with a pharmacy and retail background, he has an understanding of system and process, providing insight into business improvement.

Learn more about our Pharmacy services here.

Superannuation – individuals

Individuals are able to claim a tax deduction for personal superannuation contributions up to your $30,000 cap for the 2025 financial year (which includes contributions from your employer). There are also other eligibility criteria you must meet.

Don’t forget that carry-forward unused concessional contributions may also available if you haven’t used your full cap for the 2020, 2021, 2022, 2023 and 2024 financial years. This is the last year that any unused cap amount for 2020 can be utilised. If this is something you would like to utilise, please let us know and we can assess your eligibility and calculate how much can be utilised from prior years.

Should you plan to make a personal contribution to your superannuation account before the end of the 2025 financial year, make sure to check your fund’s cut off dates and payment reference number relevant for personal contributions (eg. BPay). Most retail funds require you to make your contribution by the second or third week of June to ensure it is received and allocated to your account by 30 June 2025.

A reminder that in order to claim a deduction for these super contributions, you must give your super fund a notice of intent to claim a tax deduction form and get an acknowledgement letter from the fund.  The Notice of Intent to claim a tax deduction will usually be sent by a retail fund in July and can be completed and lodged at any time prior to your income tax return being finalised.  You must receive an acknowledgement letter from the fund prior to lodgement of the income tax return.

Individuals are also able to make after-tax contributions (i.e. no tax deduction claimed) within annual, 3 year and total superannuation balance caps to assist in long-term tax minimisation.  Please contact your Holman Hodge advisor for further information as a personal assessment of your situation is important and the caps are changing from 1 July 2025.

Superannuation – businesses

Superannuation is deductible when paid. If you pay the June quarter super prior to 30 June (rather than waiting until the due date of 28 July), you are able to claim this as a tax deduction in the 2025 financial year.

If you would like to claim a deduction for these super payments, it is important to confirm with your software/clearing house provider what the relevant cut-off dates are for payments to be received by the super funds by 30 June.

Can we give you a hand?

If you would like any further detail on the above, or for an estimate of your tax position for the 2025 financial year, please contact your Holman Hodge advisor.

As we approach the end of the financial year it’s a good time to start thinking about what you could do to minimise your tax liability.

Discretionary trusts

• Trust minutes/resolutions: Trustees of discretionary trusts have to resolve where they would like to distribute their income for the 2025 financial year prior to 30 June 2025. We will discuss distribution strategies with the trustees and assist with the documentation of these ahead of 30 June.
• Careful consideration needs to be had with regards to trust distributions across family groups. The ATO has provided guidance which details their position with regards to this and where it impacts your group, we will discuss this with you in your year end tax planning meeting. Alternatively you can contact us directly to discuss.

Tax Planning Tips & Information

• The company tax rate for base rate entity companies remains at 25%.
• If you are a small business (aggregated turnover less than $10 million) you can claim an immediate deduction for assets purchased under $20,000, provided the asset is ready for use by 30 June 2025.
• Superannuation: Individuals should consider whether superannuation contributions should be made up to the concession cap ($30,000 for 2025).  Don’t forget that carry-forward unused concessional contributions are available which allow individuals to claim an additional tax deduction if a superannuation contribution is made to use up unused concessional contributions from the 2020, 2021, 2022, 2023, 2024 financial years. Please note, to claim a personal superannuation contribution, a notice of intent must be lodged with the superannuation fund. This is the last year that any unused cap amount for 2020 can be utilised. There are also other eligibility criteria you must meet.
• Capital Gains Tax: If you have made a capital gain during the 2025 financial year, you may consider realising a capital loss (if appropriate) on another asset to offset the capital gain.
• Cash flow: Vary PAYG instalments for the June 2025 quarter (if appropriate). This is best done in conjunction with an estimate of your 2025 tax position.
• Working from home deductions: You can use the Fixed Rate method and claim 70 cents per hour for the 2025 financial year where you worked from home. Make sure you have detailed records that record the total number of hours you work from home and the expense you incur while working from home. You can also use the actual cost method.
• Ensure that you retain receipts or substantiation for any expenses you would like to claim such as those related to your work, self-education, travel and donations.
• If you travel over 5,000kms in your motor vehicle for work, consider whether you should maintain a log book or whether you need to complete a new one (to be completed every five years). If you are relying on a log book prepared from a previous year you also need to record the odometer reading as at 30 June.
• Trading stock: Conduct a stocktake at 30 June, write off any obsolete or damaged stock and choose your stock valuation method. You can use cost, market selling value or replacement value, for each item, and this can be changed each year. If you are a small business entity and your trading stock value has not moved by more than $5,000 you do not have to do a stocktake.
• Superannuation (businesses): Pay your super before 30 June in order to get a tax deduction for the 2025 financial year. Super contributions need to have been received by the superannuation fund by 30 June – confirm with your software/clearing house provider if there are any cut-off dates to ensure this occurs. Also note that from 1 July 2025 the Superannuation Guarantee (SG) rate will rise from 11.5% to 12%. Before this date, ensure you update your accounting and payroll systems, review and adjust your wage budgets and inform your team of any changes.
• Accrued expenses: if you have a presently existing liability to pay an amount at 30 June, even where you may not have an invoice, the amount should be accrued to enable a tax deduction to be claimed in the current year.
• Prepaid expenses: If your business is a small business entity, you are entitled to a tax deduction where expenses covering a period of up to 12 months are prepaid.
• Bad debts: Review and write off bad debts to ensure a deduction in 2025 financial year.
• Bonuses to staff: if you pay bonuses to employees, a simple accrual may not be enough to ensure a deduction at 30 June.  To claim a deduction you must ensure that you have presently existing obligation to pay the bonus and that it is quantifiable.

Can we give you a hand?

If you would like any further detail on the above, or for an estimate of your tax position for the 2025 financial year, please contact your Holman Hodge advisor.