Tax Planning Strategies

Did you get hit with a big tax bill for last financial year and don’t want it to happen again? Or have a feeling you may be in for it this year?
The end of the 2020/21 financial year is only a few weeks away, below are some strategies you can use to minimise your taxable income for the year.

1. Get your books up to date
First and foremost, ensure your bookkeeping is fully up to date. This allows you to run and analyse real time reports that show the current position your business is in. You will need to check what the current profit projection is to be able to plan and implement strategies to minimise your assessable taxable income.
2. Defer Invoicing
In some cases you may be able to defer invoicing for goods or services until after June 30 especially if the goods or services have not yet been provided. Delaying your invoicing will also mean a delay in receiving the funds, so you need to make sure you cash flow can sustain this method.
3. Pay all Debts
Most businesses have 30 trade accounts; it is a good idea to pay the trade accounts off prior to June 30. Not only will this mean you can pick up the expense for the current financial year, it will also mean your business is carrying less trade creditors.
4. Bring forward other expenses
Again, if your cashflow will allow for it, you should consider bringing forward the payment of regular expenses such as rent, rates, insurance, Workcover installments.
5. Pay your superannuation liabilities
If you wish to claim employee super contributions as an expense in the current financial year, they need to be paid to the super fund or clearing house prior to June 30. It is advisable that you make payments by June 15th to ensure they are processed by the fund prior to June 30.
6. Instant Asset Write Off/Temporary full expensing
From 7.30pm AEST on October 6th 2020 until June 30 2022 business with a turnover of up to $5 billion can claim an immediate deduction for the total business portion of most new or second-hand assets purchases or installed ready for use within the temporary time frame.
If you purchased an eligible asset up to a cost of $150,000 between July 1 2020 and October 6th 2020 you can use the instant asset write off depreciation method. The depreciation limit of $59,136 applies to the purchase of cars.
Please visit the ATO website for more information on both the Temporary full expensing and Instant asset write off.
7. Speak with your accountant
You should seek advice from your accountant prior to June 30th to ensure that you are implementing strategies that best suit your business structure.