6 things you can do to minimise your tax
If you're looking to minimise the amount of tax you pay then the best time to start planning for this is a couple of months before the end of the financial year when strategies and ideas can be built and implemented prior to the financial year. These matters remain similar year on year and need to be applied consistently each year to achieve best results.
Here are the 6 things you can do right now to minimise your tax;
1. Defer Income
2. Temporary Full Expensing / Instant Asset Write-Off.
3. Pre-Paying Expenses
4. Superannuation Contribution
5. Businesses Restructuring
6. Reviewing Debtors
Deferring Income
You may consider deferring income until the following financial year by way of deferring invoices. This is particularly valuable if you will be paying tax at a lower rate next year. Perhaps you expect your income to drop, taking you into a lower tax bracket.
When you defer income you also defer paying the tax. So, if you don’t send any invoices until July, the corresponding income will occur in 2024-25, not 2023-24.
Temporary full expensing / Instant asset write-off
When you purchase new equipment for small businesses you can choose to immediately depreciate the full cost of the asset.
This can be great if you need new things for your business and you're in a position to purchase the item before the EOFY. The instant asset write-off has been extended till the 30th of June 2024 but only up to a new limit of $20,000 per item. Always talk with us to ensure it’s a business appropriate asset.
Prepaying Expenses
If you do have some spare cash right now then prepaying some expenses for the next financial year before the 30th of June will allow you to claim the tax deduction in the current tax year.
Some really easy expenses to consider are rent, subscriptions, insurance or accounting fees. If paid by the 30th of June, up to 12 months of prepaid expenses can be deducted from the current tax year.
Superannuation Contributions
If you're in a position to make additional or larger contributions to your super you can claim an additional expense and save yourself some tax.
Remember that the payments do need to be received by the super fund prior to the 30th of June for the super contribution to be deductible in the current tax year.
Business Restructuring
The different business structures each pay different tax rates. Therefore, if your business is growing and you’re currently a partnership or sole-trader, then it may help your business to move to a company structure for tax benefits especially if you're reinvesting profits into the business. It’s important to talk to us if you’re considering changing your business structure
Reviewing Debtors
If your business has outstanding debtors then now may be a good time to review your debtors and determine if there are any that should be written off. Doing this before 30 June 2024 will allow you to claim a bad debt deduction.
If you would like to know more about how to minimise your tax then please contact me paul@congdonfuzi.com.au or use the button below to book in a time for us to call you.