Tax Planning – Maximising your Tax Advantage

As the financial year draws to a close, business owners are presented with an opportunity to maximize their tax advantage. In this article, we provide a  pre-30 June checklist to help you identify and leverage effective tax planning strategies. By optimising deductions and capitalising on incentives, you can position your business for financial success in the upcoming year.

Bring staff expenses forward – if you have outstanding superannuation liabilities or plan to give any staff annual bonuses, consider bringing these expenses forward to ensure they are deductible in the current income year.

Review your debtors – if you have unpaid accounts that are unlikely to be settled before 30 June, you may be able to write these off as bad debts to claim a tax deduction, subject to satisfying certain criteria.

Resolve trust income distributions – if you operate your business or have investments held in a trust, ensure the trustee makes trust income distribution resolutions prior to 30 June to ensure ATO compliance and tax effectiveness.

Declare dividends and reconcile shareholder or director loans – this includes ensuring the minimum annual repayments of interest and principal are made pursuant to Division 7A prior to 30 June. Confirm the franking percentage on declared dividends as well.

Accrue personal expenditures – consider making additional personal voluntary super contributions up to the maximum annual deductible amount of $27,500 (including utilising any unused carried forward contributions from prior years) and prepaying interest on investment loans for geared assets like rental properties.

Deferring income – depending on your cash flow situation and method of accounting, you may be able to defer debtor payments until after 30 June to push the recognition of accrued income to the next financial year, thereby reducing your overall tax liability.

Temporary Full Expensing – consider purchasing key business assets now, ensuring they are installed and ready for use before 30 June 2023 to be eligible for a deduction under this scheme.

Pre-pay business expenses – you may claim a deduction this year for works or expenditure planned in the next 12 months (if your business turnover is under $10 million per annum).

Consider new digital processes – small businesses can deduct an additional 20 percent of the expenditure incurred for business digital operations until 30 June 2023 (if your business turnover is under $50 million per annum). Note that this measure is still yet to be enacted as law.

Review compliance and reporting obligations, including:

• Vehicle log books
• Finalisation and reconciliation of Single Touch Payroll
• Taxable Payments Annual Report