This year is flying and June 30 will be here before we know it.
Sadly, that’s too late to reduce your tax bill and make tax strategies work for your business, which is why planning ahead with your accountant now will help you understand what you need to do before June 30 to minimise your tax bill in 2022.
In this blog, we are sharing how to plan for your tax and reduce your bill before tax time.
What is tax planning?
Tax planning is the financial planning of your business to reduce the amount of tax you pay, that is, reducing your tax liabilities and taking advantage of tax exemptions so you pay the least amount of tax legally possible.
Having a tax plan in place before June 30 will help you make strategic decisions to maximise your returns before tax time.
What are tax strategies?
Tax strategies will differ depending on the entity structure you trade under. For example, trust, partnership, company or sole trader.
Strategies can include:
- Prepaying expenses (such as rent, insurance, interest, subscriptions)
- Taking advantage of depreciation measures such as the temporary full expensing of eligible assets
- Reviewing the timing of your invoicing
- Reviewing debtors and writing off bad debts
- Topping up super contributions
- Purchasing necessary equipment or business assets in the current financial year. However, avoid buying business assets to save tax because paying $1 to save a potential 30 cents in tax will not help with your cash flow!
What else to look for when tax planning?
Other things we look at when conducting a tax planning session is ensuring that you are in the correct business structure. It may be time to move from being a sole trader to a company or another structure to suit your individual circumstances.
Looking at your GST accounting basis is also part of our review. Accounting for GST on a cash basis rather than an accrual basis (or the reverse) can have a big impact on your cash flow.
Some other considerations when tax planning:
Motor vehicles used for private use – you need to keep a logbook that covers a minimum of 12 weeks, this log book can then cover you for five years.
Is your motor vehicle owned in a company? You may have a Fringe Benefits Tax liability. Talk to your accountant about what you need to do to avoid this.
Book a tax planning session!
Vibrant Business Tax Solutions’ clients will be contacted from the end of April to book in time to discuss individual situations and so we can prepare a tax plan for you.
However, if you are not a Vibrant Business client, you can still book a session.
Our Tax Planning Sessions include:
- Review of your year to date income and tax situation
- Estimate of your estimated taxable income for the year ended
- Taxable events that have taken place this year
- Expected taxable events for the remainder of the year
- Plans to minimize taxation liability on these events
- Answer questions you have about your taxes for the upcoming year
- Preparation of Tax Planning Report and detailed recommendations
Don’t get a tax surprise in 2022.
Book your Tax Planning session now:
☎️ 07 2103 3283