Tax planning check for businesses

Each end of financial year brings a checklist of tax planning initiatives you should consider for your business. 

If the following events have occurred this year, or you are anticipating similar changes, you need to address taxation implications immediately.

Has your business:

  • made asset acquisitions or purchases?
  • undertaken restructuring or are you considering changes?
  • made changes to its ownership?
  • expectations of a higher than normal taxable income?
  • started up any new businesses under a different entity?     

Tax planning is simply arranging your affairs, both personally and for your business, to legally minimise taxation liabilities.

However, it is important not to pursue tax reduction strategies if it upsets the “balance” or workings of your business. Not all tax strategies are suitable to all businesses. You should always measure the tax strategies available against the needs of your business to ensure the optimum result is achieved.

The following are some broad tax planning techniques that could be adopted for your business this financial year:

Reducing assessable income and your rate of tax:
Deferred Income
It is possible to minimise income by deferring receipts. Large receipts expected close to the end of the year should be closely assessed.

Maximise deductions
Special consideration should be given to the prepayment of expenses (including borrowing expenses). Other deductible expenses to scrutinise include superannuation contributions, some bad debts, depreciation on business assets, and devaluation of your trading stock.

Asset write-offs
Assets costing less than the instant asset write-off threshold, currently $20,000, can be written off (deducted) in the year they are bought and used, or installed ready-for-use. This applies irrespective of whether the asset is purchased new or second-hand.

Tax offsets (rebates and credits)
Investigate how your business accounts for dividends received or to be distributed to shareholders and beneficiaries such as trusts.

Capital Gains Tax
Strategies for handling asset purchases and sales have a marked effect on your taxation position. If you have CGT liabilities you may benefit from having the receipt determined to be capital in nature rather than revenue. This could be attractive if you have unused capital losses .If selling your business focus on the best way to transfer ownership and receive the proceeds with minimum CGT implications.

Which tax vehicle?
The correct structuring of your family group can significantly improve your tax position. The channelling of income to a family trust might be an excellent way of minimising overall tax liability. Group structures should be reviewed each year to ensure you remain ahead of the game with your business.

As a business owner, there is a multitude of options available to you to minimise your personal tax… the right one for you will depend upon your specific circumstances. Make an appointment to talk to us to ensure you are utilising the best tax management practices.

Published : 15 Jun 2018

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