With only two weeks to go until the end of the financial year, it is time to start reviewing your tax. In the following paragraph, we will talk about how to get your tax in order and minimize your tax.
Calculate Your Profit
The first thing is to know how much you are earning. If your records is up to date in software like Xero, the figure should be ready for you given the accounts is up to date. Otherwise, talk to your bookkeeper or accountant to get a rough number of your earnings. And do not forget to check the potential distributions you are entitled to receive from family trust and other investments. You need to understand how much you earned before implement any tax saving strategies.
Utilize The Special Deductions Rule
There are few year-end deductions for business owners. ATO has provided generous concession for some capital expenditures under $20K threshold. You should check your eligibility to utilize these benefit. If you are small business owners, do not forget the special rules you have in year-end stock taking and general pool depreciation.
Review Your Cash Flow
As most of the strategies require the business to invest more money into tax effective products, you cannot avoid asking one question: Do I have enough money to take the benefit? There is little benefit if you have to stretch your cash flow to access the tax benefit. Especially when your business heavily relies on a healthy cash flow. When reviewing your cash flow position, you should also take into consideration of the impact of your future tax liabilities. After all, you might not be as rich as the bank account tells you.
Plan And Take Action Before The Due Dates
So you had complete all the above tests and realized there is still room for your tax planning. Some common practice including concessional super contribution, dividend, family trust distribution planning, prepayments and stock management. You need to check with your accountant for the best options. And be aware even the best strategy has its due date for implementation. Be smart to take early actions to avoid missing your claim.