With the end of financial year (EOFY) fast approaching, the next few months provide the greatest opportunity to set strategies in place to help minimise your tax payable come June 30. For most business owners, this is the most important part of the year. Tax compliance; the lodgement of your tax return, is purely looking back and reporting on what happened over the last 12 months. This is purely showing a historical event, and no matter how good your accountant may be, what’s done is often done. You don’t want to be in the situation where you come to know of changes you could have made previously that would have reduced your tax payable. This is where tax planning comes in.
Tax Planning Strategies
The EOFY is often seen as a burden to many business owners. Instead, it should be seen as an opportunity to ensure you have optimised your financials for the year and prepare to start the new financial year in the best possible position.
Tax planning is looking forward and allows you to create history. This may take the form of restructuring your affairs to benefit from legislative changes, or investing in a tax effective manner to allow better use of negative gearing or superannuation contributions, for example.
When is the Best Time of Year to Consider Tax Planning?
Typically, April through to May is the best time to engage your accountant for tax planning strategies each year. By this point, you would have your March figures up to date, providing you with a full nine months of trading. Therefore, estimating three months will put you in a relatively accurate end of year position. It gives business owners a good amount of time to implement strategies before June 30 arises.
What Tax Planning Strategies Can I Implement Now?
It’s never too late to look at your financials and implement strategies that can help reduce your tax payable. We’ve highlighted some suggestions below to get you started:
• Take advantage of the $20,000 net of GST instant write off
• Put money into superannuation
• Manage the value you put on trading stock
• Claim interest on business related loans
• Go back through outstanding invoices to identify any doubtful debts
Now is the time to engage your accountant to discuss how you can make some small changes that may help you make some big savings when your tax bill comes. If you’d like a complimentary second opinion from one of Carbon’s accountants, call us today on (08) 9446 8588.