It’s well known and documented that a business’s success is driven by an owner’s ability to be proactive and organised, limiting, in particular, financial surprises.
Surprise tax obligations are a major stress point for businesses. This is why the team at K+P strongly encourage annual tax planning. Tax planning enables the business owner to stay ahead, know their tax obligations and make a plan in advance to meet them. Having your tax obligations under control and keeping you out of the ATO’s spotlight means you can freely focus on building your business. Tax liability can also be factored into business cashflow plan.
Tax planning work is typically undertaken in May and June each year. The tax return for the year is generally due and payable in May the following year. This means that by preparing a tax plan for the 2020FY now, you’re basically one year ahead – there will be no surprises come May 2021 when you need to lodge and pay your tax for 2020. This also allows you to plan for the quarterly PAYG instalment liability coming up in the next financial year.
What is included in a tax plan?
Collate and review the year to date results and understanding the changes from the prior year.
- Consider options to minimise the tax payable, such as reviewing any expenses that can be prepaid prior to 30 June.
- Consider personal superannuation contributions to be paid prior to 30 June.
- Consideration of current government incentives – were there any business assets to be purchased that have been put off?
- Review Division 7A loans and consider minimum repayment options.
- Division 7A future repayment plan.
- Capital Gains Tax calculations.
- Calculate the trust distributions to be made within the group that results in the most tax effective outcome.
- Calculate franked dividends to be paid.
- Preparation of the projected 10 month tax calendar for the group showing estimated tax payments and due dates (activity statements, payroll tax and income tax tax).
- Forward looking, what are the business goals for the next year?
We prepare a tax plan for our own business, let us help you with yours.