Tax Planning Time is Here Again

Article by Mark Murgatroyd

30 June is fast approaching, so now is the time to take a look at how your business has performed so far this financial year.   Has it been going pretty well?  Are you heading for a nasty tax surprise?  How would you know?  

All too often we see business owners coming to us to ask how they can reduce their tax…   well after 30 June.   Unfortunately the answer is often “not much”.  No doubt you’ve heard the phrase “the horse has already bolted”?   

The key is to be having these discussions before 30 June which should then give you time to take action in order to affect any looming tax bill.   Here are some tips on how businesses can keep their tax down.  

• Understand your tax position 

It’s vital to understand your potential taxable income and tax position before jumping into strategies.  

• Instant Asset Write Off  

Although this government measure finishes on 30 June 2023, there still may be time to buy that last minute piece of machinery or furniture provided the item is ‘installed and ready for use’ by this date.  

• Maximise superannuation contributions 

Super is only deductible if paid by 30 June.  You should consider your eligibility for the ‘carry-forward’ of unused concessional contribution caps from prior years also.  

• Prepay expenses 

You may be able to claim a 100% deduction for input costs paid by 30 June, even if the inputs are not used until the following year. 

• Profit distributions to a Company 

Over recent years the corporate tax rate has reduced significantly and is 25% this year.  

The introduction of a company into your business structure could be considered.  This process and the rules around it are complex so be sure to speak with an adviser first. 

• Family trust distributions 

Family trusts are widely used in WA businesses, and for good reason. They provide excellent flexibility when it comes to tax planning.  Any allocations must be decided on by 30 June however. 

We cannot overstate the importance of comprehensive tax planning. The relatively small cost to carry out such planning is usually rewarded with many thousands of tax dollars saved. We all know that ‘sick in the guts’ feeling from lost opportunities, and our job is to save you from that!  Even if you don’t do any of this, at least you’ll know what is coming in 12 months time. 

Please talk to us for further information. Contact Mark Murgatroyd in our Esperance office on 9079 9500.