We all want to pay as little tax as possible, but it doesn't happen by accident
As we get close to the end of the financial year, it’s usually the perfect time to take stock of where your business is and do some planning for the next year (and beyond). Planning can also double as tax minimisation when done at this time of the year, as we analyse the year that is about to be completed and your potential tax outcomes.
LAST MINUTE TAX TIPS
If you’re looking for little nuggets of gold for saving tax at the last minute, have a read of our EOY Tax Tips brochure.
There are 2 types of tax tips:
- Tips to defer your tax; and
- Tips to eliminate your tax
Most tips you hear about only defer your tax. This is the “spend money before 30 June” or “hold off on invoicing” type of tip. Still good, but you need to ensure you aren’t deferring your tax to a year where you either:
- Pay more tax than you would now; or
- Place such an added tax burden on next year that you can’t actually pay it (for example, if your income is going to be less next year, will you be able to afford to pay next year’s tax plus some of this years that you have deferred?)
Don’t just read what’s in the media or take what your neighbour says as gospel, have a chat to your accountant to ensure that doing these is actually going to make your situation better.
Also remember that there are very few “free” or “bonus” tax deductions. Generally, you have to spend money first in order to save some tax – which means spending $1 to save 30c (for example). Are you actually better off spending the money? If it’s something you need, by all means. If it’s something that you don’t… then consider whether you are better off putting it in the bank and paying some tax (yes, unpopular, but our job is to see you have more money in your pocket).
IMPORTANT MATTERS AND CHANGES FOR 2023/24
LONG TERM PLANNING
While there are things that can be done at the last minute to minimise your tax, the most significant gains are from getting your structure right to start with. Our Tax Planning brochure highlights the massive difference this can make.
LATE LODGMENT AMNESTY
As part of the recent federal budget, an amnesty was announced and begins on 1 June 2023. Basically, if you get your stuff up to date before 31 December, the ATO will waive all penalties (but interest will still apply). The amnesty is available to businesses with a turnover of less than $10mil and families with less than $5mil of net wealth and applies to lodgements due between December 2019 and February 2022.
BUSINESS PLANNING AND THE CURRENT CLIMATE
With the effects of high inflation and interest rate rises starting to bite, the next year or two will require businesses to be extra diligent to ensure they remain strong and competitive. If your business does begin to experience difficulties, come and talk to us sooner rather than later. The longer it goes on, the harder it is to solve the problem.
We are currently creating a short video series on the things that every business should be looking at, and one important question is:
Do you know (do you budget for) how much you pay in GST, PAYG withholding, income tax, and superannuation each year?
Budgeting for these obligations is very important, and we have a template that can help you work out how much you should be setting aside each week or month to ensure you don’t end up with the ATO chasing you and/or auditing you. You can view the first part of this video series below.