Are you a business owner? With only a few short months until 30 June, time is running out for you to consider your tax planning options and assess your tax compliance requirements.
If in the past, you have missed out on tax saving concessions, ill-planning has left you with a larger tax bill or if you have faced penalties for compliance issues, now is the time to look over your financials with your Accountant. Instead of falling into the trap of failing to prioritise tax planning, give your business the best start to the new financial year.
So, how exactly can tax planning help? We’ve put together five common reasons below highlighting the value it can add to your business.
1. Keeping tax to the minimum
No business wants to pay more tax than they are obligated to. Details relating to your business structure, operations and revenue, will determine how much tax you are required to pay the Australian Taxation Office (ATO). However, there are lawful avenues you can consider to keep your business tax to a minimum, including:
- Gifts and donations: Digging deep to donate cash or property to an appropriate DGR can offset your taxable income if it’s made before 30 June 2018.
- Depreciation claims: Taking the time to review your depreciation schedule to ensure you haven’t missed an opportunity, can be a worthwhile investment. If you are a small business, you may also be eligible to apply for the $20K instant asset write-off.
- Tax losses: Pending a number of terms and conditions, you may be eligible to offset prior year tax losses against your taxable income.
- Bad debts: If you have question marks over debts recorded on your balance sheet, you may be able to claim a tax deduction if they are written off as bad debt.
- Staff incentives: There may be an opportunity to bring forward bonuses for staff.
2. Monitoring your business performance
The truth is, tax planning when adopted strategically, can do more than keep your tax to a minimum. It can also help you monitor the performance of your business. When you meet with your Accountant, they will review your estimated tax payment schedule for the next 12 months to ensure that you don’t have any nasty tax surprises, and can allocate sufficient cash to meet upcoming tax payments.
3. Ticking the compliance box
In your business, you will have a number of compliance obligations to keep on top of, as well as items you need to action before the start of the new financial year. Tax planning can help and can provide an opportunity to review the impact of any tax changes in advance (such as single touch payroll and GST withholding for new residential property sales).
4. Resolving issues before year-end
Tax planning can help you to identify any unforeseen issues in your business and put a plan in place to resolve these before they become a problem. Common items that require action are:
- Loans from private companies
- If you have a trust:
- Distributions to ‘bucket companies’
- Working out the annual profit distribution
Reviewing and correcting these issues before year end can save you from a headache down the track!
5. An opportunity to review your business structure
It is important to review your business structure on a regular basis to ensure that you have the optimum level of asset protection and tax effectiveness. Often business restructures are implemented on 1 July to minimise complexities with the accounting changeover. Accordingly, the structure review will need to be done before 30 June to make any changes effective from 1 July.
For more information about tax planning, chat to your Accountant or Advisor. Alternatively, contact our office on (07) 4632 1966 or firstname.lastname@example.org.
GENERAL ADVICE WARNING | The information provided in this article is for general information purposes only. It is not intended to be, nor should it be read as specific taxation advice. Before acting on any of the information contained in this article you should obtain advice from a specialist advisor, which is appropriate to your specific business needs, objectives and financial situation.