Nine ways to pay less tax
We’re already halfway through May, which means time is running out when it comes to money-saving tax initiatives.
But, if you act fast (very fast!), you can still take these proactive steps to minimise or defer your tax payments this financial year. Effective tax planning could save your business thousands, keeping more of your hard-earned money in your pocket.
If you’re expecting high or higher incomes and want to put strategies tin place, reach out to us in May or June so we can get everything arranged before EOFY.
Here's the list — how many are relevant to you?
1. Review debtors:
Income tax is due on invoices you've issued, even if they haven't been paid. Don't pay tax on invoices you know will never get settled; review your accounts receivable and write off any 'bad debts' immediately.
2. Review stock levels:
Your closing stock value affects business profit, and thus your tax. Higher stock values lead to higher taxable profits. Identify obsolete or old stock, and scrap or revalue it appropriately. Individual stock items can be valued at cost, market, or replacement value.
3. Review business assets:
Write off any obsolete assets and claim their remaining book value. Asset pooling can also boost depreciation expense. Though it may not fit all businesses, it's worth exploring.
4. Defer income:
If cash flow allows, consider delaying invoices until July. If the income isn't invoiced this financial year, it won't be taxed now. Ensure you have a budget to manage income and expenses during this period (we're happy to assist with this).
5. Review issued invoices:
Advance invoices for services in the next financial year might not count as earned income for this tax year. We can help you confirm if the income belongs to the next financial year, providing a clearer view during tax planning.
6. Pay the June quarter superannuation:
Did you know superannuation payments are deductible when made on time? If you can afford it, bring forward the 11% payment to June to claim the deduction immediately; this reduces your taxable income now rather than waiting a full year. The super guarantee rate will increase to 11.5% as of July 1, 2024.
7. Maximise your superannuation cap:
If superannuation is integral to your retirement plan, contribute as much as possible. We'll help you determine the contribution limits to make the most of this opportunity annually, particularly if you have a SMSF.
8. Employee Bonuses:
Bonuses become deductible once formally approved and not discretionary. Finalise and sign off on this year's bonuses to minimise taxable income.
9. Capital Gains Tax (CGT):
Reducing CGT is often about timing. Own assets for over 12 months before selling. If you have a capital gain, consider selling investments at a loss. Explore CGT rollover relief concessions with our guidance for significant savings.
Don’t pay tax office more than you need to.
If any of these apply to you, contact us as soon as possible (ideally in May or June) to schedule a consultation. We'll determine which of these preventative measures best apply to your unique circumstances and take it from there.
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