Tax planning requires a meeting with your adviser to establish your position in terms of tax payable for the year. The first step is to find out if you actually have a liability for the year. If a tax liability is estimated for the financial year, your next step should be to figure out if there are any ways you can mitigate this for the following year.
Preventing a problem is always better than curing one afterwards. To bring down your tax liability, you can look at and discuss the following 3 options:
Depreciation/Asset Write-Off Deduction
Does you business have a need for any capital investments? For example, you may require a new piece of plant and equipment for one of the team members. If this is the case, then purchasing this item before 30 June 2016 means you will be able to claim a deduction. This is a good strategy to use if you require the equipment. Also there is a special immediate deduction concessions for capital items under a certain value.
Super Contributions
Superannuation is probably one of the best investments you can make as a business owner. This will build your wealth for retirement. At the moment there is a lot of pressure to reduce the tax incentives that are associated with your superannuation deductions. If you have a tax bill coming up and you have not reached your contribution limit, then contributing funds to your superannuation fund is a great strategy.
Pre-Paying Expenses
You can pay for expenses that would not be due until after June to increase your deductions for the year. This strategy can help to minimize your tax; however, it can also leave you with a larger amount payable next year. You always need to consider your overall business strategy before you make a decision.
The above strategies need to be discussed carefully with your adviser. Paying tax is not necessary a bad thing because obviously it means you have been making profit. You do not want to try and reduce your tax to the detriment of you business for the years ahead. If you need more advice in relation to tax planning, you should contact us.