Having a tax plan before June 30 will help you make strategic decisions to maximize your tax revenue.
Tax Planning Tips
The end of the fiscal year will come to us on June 30. Now is a good time to take a look at both your taxable income and your estimated income (excluding allowable deductions) for the current financial year 2020-21. And your projected/expected taxable income for 2021-22, as they will guide your tax planning strategy.
If you expect higher earnings this fiscal year compared to your forecast/expectations for the next financial year, discuss with your accountant to consider:
Some payments of your 2021-22 expenses (such as insurance rent or professional association subscription) in the financial year 2020-21 up to 12 months of next year's expenses may be deducted in the current tax year.
Take advantage of depreciation measures, such as temporary full expenses, which allow you to deduct the business portion of the cost of the right depreciated property that has been deposited and used for the first time or is already installed for use for tax purposes between 6 months. October 2020 to June 30, 2022 (see ATO website for details)
Review and postpone some of your billing for the current tax year if appropriate.
Replenishing your voluntary allowance contribution.
Examine your debtors and cancel non-performing loans (find out more about deductions for non-performing income).
Minimize any start-up costs, if any, such as obtaining legal or accounting advice on the structure of your business and structural fees (e.g., ACCC registration fees).
If you expect high incomes in the next financial year (2021-22), discuss with your accountant to consider:
Bringing into the current payment year any financial year for the work planned to be carried out in the post-financial year, if it is appropriate to do so.
Pay your expenses as they are paid rather than prepaid during the current tax year.
Purchasing equipment or business assets needed this year. If you decide to buy business property, you should base this decision on the needs of your business. For example, you may need to purchase a transport vehicle to help expand your business operations to achieve business goals, or because it fits your business plan.
Additional tips
Avoid spending on business assets for the sake of claiming tax deductions. In most cases, you will find yourself spending $ 1 to save 30 cents * in taxes (* based on the most common business tax rates).
If your business is at a loss, you may be able to claim a deduction for the next year, be it the current year or recoup your tax losses. Find out more about business losses.
For more information, check out Concessions and What's New for Small Businesses on the ATO website
Additional tax tips for small business owners:
Here are some additional tax planning strategies to discuss with your accountant.
Accounting for GST based on cash
This means that accounting for GST is based on cash rather than deposits, so you pay the GST to the ATM as long as you actually receive the payment, not when you issue your bill. GST cash accounting is also great for improving your cash flow.
Small business restructuring
This tax planning strategy is useful in situations where you may be looking at the transition from family partnership to family confidence. If you are a small business entity (SBA), you can transfer the active assets of your business (such as goodwill) to another SBS as part of a real business structure with no change in ownership of the assets. This means that no capital gains will be paid. However, the state transfer tax may still apply.
Temporary full cost
You can take advantage of government interim spending stimulus measures that allow businesses to:
Withdrawal of business portion of the cost of the new, depreciated entity that is entitled to be deposited and used for the first time or already installed for taxable purposes between 7:30 pm (AEDT) on 6 October 2020 until June 30, 2022
Subtract the business portion of the qualifying depreciation asset.
Provides temporary full expense to the business portion of the cost of upgrading to eligible depreciation. This applies even if the property was purchased before 7:30 pm (ADTT) on October 6, 2020.
If you do not claim a deduction for assets under temporary full cost, you may be able to claim a deduction under immediate foreclosure or business investment support - amortization.
Visit the ATO website to find out more about stimulus measures
Is your return accurate and current?
Having accurate and up-to-date information is another important aspect of a tax plan that can help you maximize your deductions and allow you to
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