With the end of the financial year approaching at an amazingly fast rate, now is a prime time to start preparing your tax plan. Tax planning involves examining your business’ recent and updated financial records, BAS and your expected income for the coming quarter. Once this has been done, you can start to employ a variety of methods in order to legally minimise your tax liability.
Planning for the approaching end of financial year is usually commenced in March as it gives you time to organise yourself and create appropriate tax plans to bring into play before you lodge your returns.
Tax planning is vital in order to create a profitable business. Superannuation contributions, structured salaries, debts and investments can all save you money on tax payments. Some of the following matters could be of use in helping you to reduce your business tax liability for the 2010 financial year.
- Ensure that you meet both mandatory and maximum superannuation contribution criteria: In order to be claimed as a deduction in the current tax year, employer contribution payment/s must be made prior to 30 June. By contributing up to the annual “age-based limits” you can reduce your business’ taxable income and potentially gain at least a 30% deduction.
- Utilise prepaid expenditure options: If your business is eligible then you may be entitled to pre-pay expenditure on items such as rent, insurance premiums or advertising, for up to 12 months and claim these payments as an immediate deduction.
- Realise capital losses to reduce capital gains tax: To save on capital gains tax (CGT) and free-up money for more suitable investments, you could consider selling poor performing assets that no longer suit your circumstances. Doing this, allows you to use the capital loss you have incurred to offset a realised capital gain from another asset in the same financial year.
- Purchase equipment: If your business revenue is less than $2 million then any assets purchased before 30 June that cost less than $1000 can be claimed an immediate deduction. Additionally, in the 2009 federal Budget the Government announced that for eligible assets purchased before 31 December 2009 and installed before 31 December 2010, small businesses may be able to claim a bonus deduction.
- Defer Income: If you believe that you will be in the same or lower tax bracket next year, you should consider deferring some income until the following year. You could save yourself from being pushed into a higher income tax bracket and getting hit with a bigger tax bill.
Tax planning can be a very complicated process due to the large amount of factors that contribute to the amount of tax you are liable to pay, and they all need to be taken into account. It’s important to seek professional advice when it comes to structuring your investments and superannuation as well as various other factors such as those outlined above, in order to maximise your after tax income.
Here at The Quinn Group our experienced accountants will help you assess your situation and suggest a number of possible strategies and actions for your business. If this is done before 30 June we are confident that we will be able to obtain the best possible tax return for you and legally minimise the amount of tax that you are liable to pay.
If you are a business owner or company director speak to us today about the best way to legally reduce your 2010 taxation liability. There is no time to waste! Contact us now by submitting an online enquiry form or call 1300 QUINNS to begin creating your business’ tax plan.