Maximising your tax advantage

Posted on 16/4/2021

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The past twelve months has undoubtedly been a challenging period for many in the hospitality industry. However, South Australia’s relative success in managing COVID-19, coupled with the range of government support measures that have been made available, has meant that a number of hospitality operators have found themselves in a much stronger financial position than originally anticipated.

With the end of financial year fast approaching, tax planning should now be high on your list of priorities, as there are key considerations for the current 2020-21 tax year that could have a  significant impact on your financial plans and investments for the year ahead.

Importantly, for those business that have found themselves in a better-than-expected position, and even for those that haven’t fared as well, there are some simple steps you can take to optimise your tax position and put yourself in good position for when June 30 rolls around.


Timing is everything

Tax planning is particularly important this year as those operators who have accessed measures such as JobKeeper and the $10,000 State Government small business grants will need to be aware that any money received through such programs will be assessed as part of your taxable income. This could actually drive your tax bill up, particularly if your business has staged a strong COVID recovery.

For those business operators who have found themselves in a strong cashflow position heading toward June 30, there are several steps you can take to optimise your tax position and maximise the amount of money that remains in your pocket.

For those with cash at hand, there are opportunities to invest now or bring forward expenses that you would otherwise incur in the 2021-22 financial year to put yourself in a more advantageous tax position.


Instant Asset Write-Off

With the expansion of the Instant asset write-off scheme announced as part of last year’s Federal Budget, there is greater flexibility for businesses who are considering purchasing and installing new business assets.

For businesses, this could include equipment upgrades following the acceptance of Bank Note Acceptors and Ticket In Ticket Out that came into effect on 30 July 2020 or equipment upgrades to items such as fridges and furniture.

Even if you haven’t fared as well over the past 12 months, investing in upgrades is a way to fast-track your recovery and financing those upgrades is a way to minimise the cashflow impact while also maximising the tax benefits.

If you are considering taking advantage of the instant asset write-off, it’s important to note that any equipment needs to be installed and ready to use by June 30 to take advantage of the tax benefit this financial year. Be sure to get in touch with our finance team to discuss a suitable arrangement for your business.


Bringing forward expenses into the current financial year

Another consideration for publicans would be to bring forward any spending or invoicing into the current financial year for work or expenses that are planned for the year ahead. This could include planned renovations, rent or insurance costs, as this expenditure can be offset against your taxable income to put your business in a more advantageous position heading into next financial year.

Bringing forward planned staff expenditure is also another good way to maximise your tax position. Consider paying your superannuation liability or paying out any planned staff bonuses prior to June 30 to ensure these expenses are on the books before the end of financial year.

As we’ve previously discussed, many of the opportunities to pivot due to economic conditions is largely dependent on keeping strong proactive management of your business and regular bookkeeping practices. If you are questioning what improvements can be made in any of these areas, don’t hesitate to contact us for a chat.

Talk to our Tax Advisory Team

Brian Nimmo

Brian Nimmo

Brian specialises in providing high level taxation advice. Tax consulting across corporate tax, capital gains tax and international tax, to ATO product and class rulings for managed investment schemes.

Damon Hammond

Damon Hammond

Working closely with owners of SME’s and privately owned businesses has seen Damon assist them in obtaining the very best results time and time again.

Neil Oakes

Neil Oakes

Providing tax consulting advice to small, medium and large enterprises, with specific focus in the aged-care and property industries.

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