Strategic tax planning needs to be a proactive process to achieve better tax outcomes
End of Financial Year is fast approaching. That means its an important time to start tax planning to achieve optimal tax outcomes before 30 June. This year there have been some important changes to tax laws which should be properly considered by taxpayers, including changes to Division 7A and franking credit rules, trust distribution limits, professional services profit allocations, and temporary full expensing rules.
Below is a checklist of some key items to consider:
- Government incentives and support payments to be included in your tax return
- Loss carry back provision
- Temporary full expensing
- Write off bad debts
- Prepare stock takes for inventory
- Bring forward planned expenditure
- Plan trust distribution resolutions
- Declare dividends and reconcile shareholder / director loans
- Comply with Division 7A loan obligations
- Deferring income
- Review compliance and reporting obligations, including vehicle log books, finalisation of Single Touch Payroll, and Taxable Payments Annual Report
- Paying superannuation before 20 June to allow for tax deduction in this financial year
- Calculate and manage potential capital gains
- Determine use of Family Trusts or ‘bucket companies’ for lower applied tax rates compared to individuals
How a smart accountant can help
This is the time where taxpayers should hold strategic tax planning meetings with their accountant. A critical starting point is preparing a draft forecast to understand the expected profit for the end of financial year. The estimate can be used to understand the tax position, which allows accountants to recommend strategies to optimise tax outcomes.
