Business owners commonly pay more tax than necessary by leaving their tax planning until the last minute. What you do now, in advance of June 30, can make a significant difference at tax time. In this article we share key considerations that will help you get on the front foot before tax time and only pay as much tax as is really necessary.
There is a big difference between tax planning and tax return preparation.
Effective tax planning is about looking forward, not backwards… and the more time you commit to planning tax strategies in advance of June 30, the more opportunity there is to reap the financial rewards.
Here we outline proactive tax planning considerations that could improve your personal and business outcomes.
#1: Taking action early can save tax
Tax savings are made through proactive planning and tax minimisation strategies which may include:
- Planning expenses and payments such as bringing forward deductible expenses from the coming financial year to this one. Pre-paying expenses (before June 30, this year) such as rent or loan interest 12 months in advance or taking advantage of available concessions such as the instant asset write off scheme, may create valuable deductions that can offset profit earned this year.
- Deferring taxable income to the following financial year works to reduce overall income in the current financial year. It may also be possible to defer any receipt of investment income.
- Managing Capital Gains through deferring the sale/contract date of Capital Gains assets until after June 30.
- Cap your tax using a Family Trust or ‘Bucket Company’ to cap your tax at 26% or 30%.
- Attend to Trust Distribution Resolutions by June 30 if you have a Discretionary or Family Trust. If a Trustee fails to make a resolution to distribute the income of the Trust, the Trustee may be assessed by the ATO on the Trust income at the highest marginal tax rate of 47% rather than intended beneficiaries being taxed.
#2: Tax planning can improve your cashflow and business performance
Tax planning is more than just tax minimisation and tax compliance, it’s an opportunity to align your tax management with your overall business and financial goals. It’s about strategic advice and implementing tax planning strategies that consider your individual cashflow needs, debt management, business structure, trust set ups and personal prosperity requirements, including your retirement goals.
By planning in advance, and not just at tax time, we can help you create efficiencies and implement well considered strategies relating to the structure and timing of major asset purchases or funding decisions which could save you hundreds of thousands of dollars over the life of your business. Understanding your end of year tax big picture in advance assists improved cashflow management and more informed decision making.
#3: Superannuation should be central to your tax planning
Whether you have a SMSF or utilise a retail or industry super fund, superannuation is one of the most tax effective means for building your retirement savings and should be considered as part of your tax planning.
Contributing large amounts into super has become more difficult over the years. Through forward tax planning we can help you make the most of available contribution allowances and take advantage of strategies such as downsizer contributions, carry-forward contributions or the bring forward rule.
Planning in advance for SMSFs is also important. This involves reviewing assets held and ensuring compliance with the rules and regulations. We can help, as we are experienced and licensed* superannuation and SMSF strategists.
In our experience, the combination of business advice and tax planning makes a significant difference to overall business success and personal prosperity.
If you are looking for improved tax outcomes, we encourage you to make an appointment by calling 03 9708 8801 or emailing firstname.lastname@example.org.
At Robinson Voss Partners, we have over 40 years combined experience and specialised expertise in tax, accounting and business advice. We are single-minded in our goal to help clients achieve business success and personal prosperity.
|Further Tax Planning Information
Learn more about our tax planning approach by requesting a copy of our Business and Personal Tax Minimisation Guides.
General Advice Disclaimer: The information contained within this document is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Robinson Voss Partners (RV Partners) strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances.