Are you paying more tax than you need to?

What can you do to reduce your tax and the tax paid by your business? The answer is quite a bit but it takes planning pre 30 June. Here are our top tips:

Timing is everything 

Accelerate deductions 

For businesses, if your cashflow is good, make the purchases you need before the end of the financial year to claim the deduction, particularly those with turnover under $10 million. 

For individuals, it's a good time for charitable giving. 

Money or debts owed to private companies 

It's common for business owners to take cash out of their business or for the business to fund some personal expenses through the year – these appear in the shareholder loan account. If this has occurred, it is important that these debts are either repaid by 30 June (you can declare dividends to pay any outstanding shareholder loan accounts) or a formal loan agreement (with specific conditions) is put in place. Without taking action, the ATO will treat any outstanding amount as a deemed dividend taxable in the hands of the shareholder at their marginal tax rate. 

House-keeping for business 

• For Trusts, it is essential that decisions to distribute pre 30 June income are documented in writing. 

• Write-off bad debts • Review your asset register and scrap any obsolete plant 

• Bring forward repairs, consumables, trade gifts or donations 

• Pay June quarter employee super contributions now if cashflow allows 

• Realise any capital losses and reduce gains 

• Raise inter-entity management fees by June 30