No Sympathy For The Devil - Start Tax Planning Now & Save Thousands!

INTRODUCTION:

"Please allow me to introduce myself, I'm a man of wealth & taste.

I've been around for a long, long year, stole many a man's soul & faith

Pleased to meet you, hope you guessed my name!?"

For those that mightn't know this Rolling Stones song, unless you start tax planning now, you may find yourself dancing with the ATO much longer than you had to (and don't forget to bring the chequebook)!

You see, by not only doing this tax planning and sitting down with with your small business accountant, you are in fact doing some business planning at the very same time without even knowing it. Believe me it can be a win-win situation.

So what are some of the key things you should be looking at?

Figure 1: Yes, if you are a small business entity and you use art for your office you can write off immediately up to $20,000! Photo courtesy Lara Scolari Gallery Balmain

1. Look at actuals year to date & project end of this year & next

Usually you will need to look at where your actual results are sitting tax wise and then make some projections for the last couple of months. You then need to work out how much tax you might pay if you do absolutely nothing. If there is no tax to pay, why is this? Is it because you've spent some extra money this year or is it because the business is losing money? Naturally you will want to fix what is causing the loss but also you might be able to bring forward some income into this year where it suits depending on your structure.

If you have little or no income personally, wherever possible you will try and ensure that enough deductions (usually in the form of wages) from your business come down to you and your family are an individual level to make sure you are utilising the tax free threshold of $18,200 (except for children under 18 in most cases). This means that your business got a deduction and saved tax (e.g. 30%) and you will have paid no tax at an individual level in this example. Be sure that you can justify the wage for hours worked etc. and there maybe some super and workers comp to pay.

Believe it or not, with changes to the tax rules (actual and proposed) from 1 July 2016, it can be a great idea to do your 2016/17 three way budgets now as you maybe able to save thousands by understanding which year to have income and expenses suits you better.

For example, if your turnover is $2,000,000 at the moment and you project that you will gross less than $10,000,000 next year and you currently don't qualify as a small business entity, delaying purchasing an asset to 1 July 2016 could get you an immediate write off of $20,000 where you won't get that this year.

Now, if you have worked out you have a tax problem....

2. incur expenses before 30 June

Where you will need to spend money such as consumables in the next month or so or just after year end, bring forward this expenditure into this financial year.

If you are a small business entity, assets less than $20,000 used in business can be written off immediately.

Figure 2: You don't want a tax bill that causes this!

3. defer income

Where possible, delay invoices and receipts to after 30 June and if a small business take advantage of the proposed tax rate drop to 27.5% next year if a small business entity.

4. Pay super

To get a deduction this year for super owed for the June quarter, make sure you pay it before 30 June 2016 otherwise it is claimable next year.

5. write off bad debts

Write off bad debts before 30 June and record your attempts to recover them.

6. trust distributions

Be sure to prepare and sign your trust distribution minutes before 30 June 2016.

7. primary producer

If you have been in a drought (or flood or fire) affected area, you maybe able to defer livestock profits into later years. Consider using Farm Management Deposits where you satisfy certain conditions so you get a deduction for basically putting money into what is like a term deposit (speak to your small business accountants Sydney and financial institution).

8. Capital gains

If you plan to sell an asset before 30 June, work out how much capital gains tax you would need to pay and whether you can eliminate most of the tax using the small business CGT concessions (if conditions are satisfied). Remember that the trigger for the capital gains tax date is usually the date of signing the contract, not settlement.

CONCLUSION:

The above is only a sample of what you can do to save some of your hard earned dollars from tax. Of course, you need to look at your individual circumstances and speak with your small business accountant Sydney and Dubbo to determine whether you can access these tips and how much they will actually save you.

The saving could be tens or even hundreds of thousands of dollars which will have you going like the song "Wh- Whoo!"