With the new financial year underway, it’s a good time to look ahead. While many tax planning decisions are made around the end of the financial year, the best outcomes often come from planning ahead. Taking a proactive approach throughout the year can help improve cash flow, maximise available tax outcomes and reduce the risk of unexpected tax issues.
Ash Chand, Accounting Manager, shares some key tax planning opportunities to consider throughout the year, along with common pitfalls to avoid.
Opportunities to consider
There are a number of tax planning strategies that may be worth discussing with your Accountant throughout the year.
These can include reviewing the timing of income and deductible expenses, considering business asset purchases and available depreciation concessions, and writing off obsolete stock or bad debts where appropriate.
It’s also important to review superannuation contributions, trust distributions, and any loans between a company and its shareholders or directors to ensure they are managed correctly and remain tax compliant.
The right strategy will depend on your business structure, financial position and long-term goals, making regular reviews an important part of good tax planning.
Common pitfalls to avoid
Just as important as identifying opportunities is avoiding mistakes that can become costly later.
Some of the more common issues include claiming deductions without appropriate supporting records, overlooking the timing requirements for superannuation payments, incorrectly treating capital expenditure as an operating expense, failing to reconcile payroll or GST balances, or not reviewing company loan arrangements before they become an issue.
The ATO also continues to monitor arrangements such as wash sales, where assets are sold and repurchased primarily to create a tax benefit.
Planning ahead
Tax planning is most effective when it’s part of an ongoing conversation rather than a once-a-year exercise. Reviewing your position regularly can help you stay compliant, make informed decisions and take advantage of opportunities as they arise, rather than waiting until the end of the financial year.
If you would like to start a conversation about your tax planning strategy for the year ahead, please get in touch with our Accounting team.
