It’s well known that managing finances diligently is crucial for any business, particularly in today’s economic climate. Every dollar saved can contribute significantly to the bottom line. The value of expert tax planning services can help improve your business’ financial position, ensure compliance and optimise financial strategies. 

While the goal for most businesses is to maximise profits and minimise tax liabilities, it’s important to meet regulatory requirements. Expert tax planning advice can assist in legally reducing tax obligations while potentially offering other advantages for you and your business.

Tax planning strategies vary based on individual circumstances, and it can be helpful to see a practical example to understand the possibilities. However, it’s important to note that the following example is for illustrative purposes only. Actual outcomes depend on various factors, so seeking personalised expert advice is recommended.

Disclaimer: This following scenario is a general example only, used to demonstrate possible outcomes. There are a number of contributing factors that will determine individual outcomes and as such you should seek expert tax planning advice that is tailored to your situation.

Let’s take a look at an example where expert tax planning advice not only reduced the overall amount of company tax that was payable, but the business also acquired a new asset and the owner significantly increased their superannuation nest egg. Not a bad outcome!

Comparing Financial Outcomes with, and without Expert Tax Planning Advice

For those of you who like to see the figures, here’s a simplified comparison of a standard P&L with, and without, implementing a tax planning strategy.

In this example, the business is a consulting firm that is operating via a company business structure.

The left column of figures is financial data for the 2024 financial year with no tax planning strategies in place. 

In that scenario, with no tax planning advice, the company tax liability would be $11,718.25.

The right column shows the outcome where the client sought expert tax planning advice and a number of tax planning strategies were applied.

You’ll see 2 bolded expense figures that didn’t appear in the data on the left, $9,000 & $20,900. Let’s explain those a little further.

Understanding the Potential Benefits of Tax Planning Advice

Depreciation – utilising the small business instant asset write-off provision allows eligible businesses to claim an immediate deduction for the business portion of the cost of an asset in the year it is first used or installed ready for use for a taxable purpose.

The consulting firm purchases a new photocopying machine to the value of $9000 and is able to claim it as an immediate deduction. 

Additional Superannuation Contribution – the concessional superannuation cap is $27,500 for the 2024 financial year. Topping up the director’s compulsory superannuation contribution to the full amount of the cap (compulsory contribution of $6,600 + top up of $20,900 = $27,500) significantly increases the owners superannuation balance and is a great long term strategy for retirement.

Increased Expenses Reduce Profit – both of the above strategies are additional expenses to the business which doesn’t sound like something that you would necessarily want to do, or strive for. But in fact, as you can see in this instance, additional expenses are not necessarily a bad thing.

These 2 expenses reduce the overall company profit by $29,900 ($9,000 (photocopying machine) + $20,900 (additional superannuation contribution)).

The reduced profit then results in a reduction of the business’ company tax liability from $11,718.25 to $4,243.25. That’s a difference of an extra $7,475 in the business’ bank account.

From this example, you can see that expert tax planning advice not only reduced the company tax liability for the consulting firm but had other benefits for the business too – a new photocopying machine and an additional superannuation contribution is definitely a step in the right direction for long term financial strategy for the owner.

Get Expert Tax Planning Advice

At The Quinn Group, our team of tax lawyers and tax accountants are experienced in preparing and executing comprehensive tax planning strategies and have achieved great results for all types of businesses. With the end of the financial year not too far away, now is the perfect time to take action. Contact us by submitting an online enquiry form or calling us on 1300 QUINNS or +61 2 9223 9166 to schedule your tax planning appointment.