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June 07 - Books - Business Advice - Tax Accounting

5 Things To Consider For Your Tax Planning

Whilst everyone else is getting comfy in their trackies, settling into winter work vibes (probably with a glass of red at lunch time if you’re in Melbourne at the moment), accountants are on their tenth coffee and twentieth zoom call for the day because… it’s TAX TIME. Zero chill vibes here, productivity only. 

To help you get ready for EOFY (and that tax chat you’ve hopefully had or are having with your accountant), we’ve put together five things you should be considering this month for your tax planning. First, we’d like to shamelessly plug Jason’s podcast The Numbers Game, because their latest episode talks about tax hacks. Perfect timing!

Reconcile your accounts! Are the numbers up to date?

Mr Rona has a way of coming into our lives and running us off our feet; so this is a gentle reminder to get your books in order and accounts reconciled. If you need assistance with this, we’re here to help – don’t forget we can do your books too. Here’s a couple of tax saving strategies to consider as you check this off your list:

  1. Bring forward your expenses

If you have expenses coming up in July or August, pre-pay them now to reduce your taxable income and claim those deductions this year. For instance, your accounting fees :wink:. Likewise, if you’re looking at making any business purchases, make them before 30 June so you can write them off this financial year.

  1. Defer Income*

As per above, by delaying large invoices until 1 July 2021, you will reduce your 2021 taxable income.

*This strategy actually works in reverse too – if you’ve had a quieter year than usual, the right strategy for you may be to bring forward income and hold some expenses back til next year when you might fall into a higher tax bracket.

Consider superannuation

Ensure all super payable for your employees is settled by June 21. Now, let’s make it about you… putting extra contributions into your own super fund can be a very tax effective strategy. These amounts are taxed at 15% versus personal income tax rates of 32.5% plus. That’s a meaty difference. So, if you have the cash, invest in your retirement and save on tax at the same time.

Changes to legislation regarding concessional contributions mean that if you didn’t used the $25k super cap, it can be carried forward historically for up to five years. Have a chat to us if you think this might apply to you!

Things that will affect your tax that you might not have considered…

Did you buy and sell crypto this year? We’ll give you a hint… we can see if you have via the ATO 😉 Crypto is regarded as a capital gains asset so just like any other asset you buy and sell for a profit, that profit is taxed. Let your accountant know if this applies to you.

Did you benefit from JobKeeper this financial year? Those payments are subject to the usual tax withheld when paying employees. Make sure you’ve set enough aside! If you use Xero, you can find this amount easily.

Temporary Full Expensing

This scheme has been extended again (a fancier name for the instant asset write off) and it’s a big win for small business. You can claim immediate deductions for any depreciable asset purchase and there is no dollar limit to this amount for purchases between October 6 2020 and June 30 2022.

Extra strategies to consider… 

We’re all about giving you the tips and strategies to make your tax planning process as easy as possible. So here’s a list! As usual, feel free to reach out if you’re unsure about something we’ve mentioned or need help to get your numbers organised. 

Tax planning strategies:

  • Buckets Companies
  • Income Splitting
  • Tax Effective Loan Restructure
  • Employing Family Members

A few other things to consider to maximise your tax savings:

  • Dividend payments
  • Bonus payments
  • Management fees
  • Write off Bad Debts
  • Donations
  • Do a Stocktake
  • Home office costs
  • Prepay interest on investment property
  • Prepay or purchase Income Protection Insurance

Questions? Concerns? Tax planning needed? Get in touch and follow us on IG.