Tax Planning Tips for Businesses 2018

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Brentnalls WA Associate Chris Smith discussing tax planning and the opportunities you can take advantage of before June 30th.


Hi my name is Chris Smith. I am an associate here at Brentnalls WA.

Just wanted to take a few moments to have a chat with you about the tax planning and some of the opportunities that might be around before 30 June 2018.

So to start with I would like to run through some of the opportunities that will be there.

Income: You have the opportunity to potentially defer some income and defer the tax payments that come into it.

Realising capital losses: If you have had some capital gains during the year there is always an opportunity where you might be able to defer or minimise some of the tax by losing some losses on shares that you feel like you do not need to hold any longer.

Writing off bad-debt: So bad debt is a contentious one but if you have taken all steps necessary to collect that debt you can receive a tax deduction for writing these amounts off.

Another important rule change recently is with the small business entity test, for businesses that have a turnover and group turnover less than $10 million are able to access some of these great rules. There is a $20,000 immediate right-off for plant and equipment; this has recently been extended to the 30th of June 2019 following the recent budget announcements.

There is an opportunity with your GST to convert from an accrual basis to cash; this could be an opportunity to improve your cash flow if you have a high amount of debtors.

Pre-payments: If you make prepayments for expenses, traditionally those amounts would be a capital loss on your balance sheet with no deductions allowed. But under the small entity rules, you may be able to secure a deduction up front.

The Expenses: We have the opportunity to accrue wages. These are wages that you have not yet paid to your employees but have incurred those expenses and thereby you are entitled to a tax deduction.

Review of your depreciation schedule: Is there any equipment that is written up to a higher value than it relates to or if you are not using the equipment anymore. We have got the ability to write this off and receive a deduction this year.

Review of your inventory: Have you got slow-moving inventory that needs to be written off or stock that you don’t even hold anymore that needs to be written off.

One of the most important things we do with our tax planning process is the cash flow planning. So, we really want to understand the timing of your tax payments and the timing of your tax instalments.

Is there an ability to vary any amounts and keep the cash in your bank rather than in the ATO’s account.

I want to stress importantly is the distribution minutes and having these signed before the 30th of June. The ATO audit activity has really engrossed over the current years and I can’t stress the importance of having accurate distribution minutes signed-off.

Part of our tax planning process is really building up to optimise your tax position.

Superannuation: You might not all be aware but there are new caps in place for the new financial year and then one of the other ways you can get a deduction for your business is if you pay for all your staff and employee’s superannuation before the 30th of June. It is not tax deductible until you have made a payment.

Be careful, this year 30 June is on a Saturday so make sure those payments are made nice and early and cleared in the bank accounts before then.

Other tax planning: Division 7A, is there any way we can make cash payments rather than declaring a dividend. There is some pre-UPE’s, the budget announcement recently has brought pre-UPE’s under the new division 7A rules effective 1 July 2019.

Single Touch Payroll: IS the ability to start paying directors a dividend instead of a wage. We need to start getting these things right now, rather than waiting for 2019 tax-planning.

R&D: There have been some recent rule changes.

I just want to give a quick overview of some of the things for tax planning; I think it is a really valuable exercise. Some of the most valuable work we do in any period of time. If you do need to find out any further information please contact the directors here or myself. Happy to help.

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Chris Mandzufas

Chris Mandzufas

Chris has a diverse range of skills and experience as a result of providing accounting, taxation, advisory board and management consulting services to owners and directors of fast growing businesses.

Chris Smith

Chris Smith

Chris Smith has been a member of the Chartered Accountants Australia & New Zealand since 2006, a member of the Tax Institute of Australia since 2013, and a registered Tax Agent since 2018.

Tony Monisse

Tony Monisse

Tony’s key focus is the integration of strategy and financial management. To this end he has developed tools and process that facilitate this integration, including business modelling, target setting and rolling cash flow forecasts.

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