Practical tips, insights and articles to help you build the business, wealth, and lifestyle you want

Tax & Business Planning – It’s not too late!

Article By | | Accounting & Tax

As 30 June quickly draws near, it is not too late for a review of your current tax position. Every year a tax planning review before 30 June will ensure reporting requirements are met, business and personal tax opportunities created by changing legislation are maximised and business growth targets and cashflow requirements are black and white.

A few key areas of tax planning this year include:

Business Planning Opportunities

Certainty of cashflow is one of the key elements of good financial management. Assessing your financial position before year end, including growth targets and taxation implications, provides an understanding of the timing of future cash inflows and outflows.

Recent changes in income tax provisions can provide businesses with significant tax savings, such as:

  • Increase in the small business turnover threshold to $10 million.
  • Immediate write-off assets under $20,000 extended to 30 June 2018
  • Accelerated depreciation
  • Immediate write-off on prepaid expenses
  • Reduction of the company tax rate to 27.5% for small businesses
  • Reduction of the maximum franking credits allocated to franked dividends to 27.5% for small businesses
  • Small business income offset provides individual taxpayers with an offset of up to $1,000

Trust Resolutions

Trustees must determine who is entitled to the trust income prior to 30 June. As part of this process, it is important for the trustee to pass a resolution to document which beneficiaries are entitled to the trust income. If a trustee fails to make a resolution to appoint a beneficiary for trust income before year end, then the trust income will be taxed at the highest individual marginal tax rate of 49%. While preparing the resolutions, it is also a good opportunity to review the profit and loss of the trust and assess the likely tax positions of potential beneficiaries.

ATO Debt Management

The ATO are clamping down on debt collection. From 1 July 2017, the ATO will report debts that remain outstanding for more than 90 days to a credit reporting agency. A credit default is a black mark that lasts for five years, and can creates problems when applying for finance. One way to prevent this from occurring is to negotiate a payment arrangement with the ATO prior to 1 July 2017. This would involve reviewing your cashflow and updated tax position to propose an affordable payment plan whist meeting future ATO obligations.

Contact your Altitude Adviser to discuss your tax position and ensure you are maximising your tax affairs before 30 June.