Tax planning tips to maximize your return

With June 30 right around the corner bend, the end of the financial year will be here before we know it.

Advice on tax preparation

Now is a perfect time to evaluate your estimated taxable income (basically, your corporation's obtainable income minus any allowable deductions) for the current financial year 2019-20, as well as your forecasted taxable income for 2020-21, as these figures will help you plan your investment strategy.

If you anticipate a higher income this fiscal year relative to your predictions for the following fiscal year, you should discuss the following with your accounting firm:

will pay Any 2020-21 costs (such as leases, benefits, and professional management fees) in advance in the 2019-20 fiscal year. You can subtract up to 12 months of expenditures from the following year in the current tax year.

Using the quick asset write-off allows you to subtract assets acquired for your company that cost far less than the corresponding threshold right away (whether the asset is purchased new or second-hand). Thresholds have improved in recent times and will be reduced to $1000 on July 1, 2020, so check the ATO website for the most up-to-date information.

Evaluating and, if necessary, deferring any of the payment processing for the current tax year.

Increasing your charitable contributions to superannuation.

Examining the debtors and erasing any uncollectible debts.

Recoup any beginning costs, such as legal and accounting opinions on the corporate structure and charges related to implementing the framework, if appropriate (e.g. ASIC company registration fee).


If you plan to earn more money next fiscal year (2020-21), discuss the following with your accountant:

Taking anything forward invoicing into the current fiscal year for planned work will be completed in the next budget year if it is possible to do so.

That is, instead of paying your expenditures in bulk, mainly during the current tax year, you can pay them when they become due.

In this year, you can purchase any equipment needed or business tax return properties. If you plan to buy business properties, you can do so based on your company's requirements. For instance, you might have to buy a delivery vehicle to help increase your company's operations or because it is in alignment with a business plan.


Added tax advice for small businesses is as follows:

Additional company tax return planning techniques to explore with your accountant are mentioned below.


Cash accounting for GST

This means you have to pay GST to the ATO whenever you receive it, not when you give your payment, so you account for GST on a cash basis instead of an accruals basis. GST cash accounting can help you improve your cash flow as well.


Rollover of small business restructure

This tax planning technique will help you move from a joint partnership to a family trust. When you're a small business entity (SBE), you can move an active asset (such as goodwill) to some other SBE as part of an executing business restructure, as long as the assets remain in your possession. This means there would be no capital gains tax to pay. State transfer taxes, although, can also apply.


Depreciation vs. instant asset write-off

You may benefit from the government's instant asset write-off program, which applies to businesses' tax returns with annual revenues of less than $500 million.

You can analyze which is more straightforward as the portion of your tax planning: Depreciation vs. immediate asset write-off.

In a nutshell, as a company grows and generates more revenue, it could be more beneficial to avoid using the instant asset write-off because you may miss out on continuing deductions and depreciation.

The Australian Taxation Office (ATO) offers valuable information on simplified depreciation for small businesses.


Is your return accurate and up to date?

One other significant feature of tax planning is getting reliable and current details, which will help you enhance your deductions and enable you and your accountant to make sensible tax decisions. This contains the following:

Making sure the company vehicle's documents are updated. If your existing logbook is so much more than five years old or your vehicle use has changed massively, you'll begin a new one. You may also want to consider buying one of the numerous mileage-tracking digital applications available.

If your company keeps stock, do a stocktake as of June 30, 2019. NB: You do not need to do a stocktake of your projected closing inventory (and opening stock) is less than $5,000.

When declaring GST on expenses, account for the personal use of company tax return properties such as automobiles.


COVID-19 is a virus that infects people.

If you've been infected with COVID-19, the ATO will assist you by:

allowing you to settle your debts or file tax forms such as activity statements with more time

assisting you in locating your misplaced tax file number (TFN) by the use of methods to verify your identification, such as your date of birth, addresses, and bank account information

reprinting tax returns, operation accounts, and assessment notices

assisting you in reconstructing missing or destroyed tax records

Can track Any owed refunds quickly.

establishing a payment plan that is customized to your specific needs, including an interest-free duration

Remitting any fines or interest accrued during the period in which impacted you.

Chat with your accountant if you have any concerns about tax planning. Contact our Accounts NextGen free small business advisory service for general help and feedback.


Arpit Umrewal

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