Welcome to the 2016/2017 Financial Year!
Now, before you start worrying about last Financial Year’s tax return – let’s face it, all the transactions that are relevant ended yesterday so what you do today won’t impact it – take some time to create a plan to minimise tax for this financial year.
If you are a regular reader of these articles (thanks!) you will have read several articles on topics such as completing your tax return, getting your records in order and discussions about deductions. Interest in those articles usually increases dramatically In late May and June, which indicates that many of you are looking at last-minute activities to improve your chances of getting a bigger refund. Unfortunately, by leaving things to the last minute, there often isn’t time to complete many of the tax-saving actions on offer, especially if you are also trying to manage your own business at the same time! So, rather than waiting another ten-and-a-half months before planning for 2016/2017, here are two areas you can focus on that will help minimise your tax for the whole year:
Keep transaction records of everything. If you can’t prove a transaction occurred, it really shouldn’t be included in your tax return. Small transactions don’t require a receipt if they are under a minimum threshold ($300), but what if you exceed the threshold? Also, what about all those random business purchases that are forgotten? If you keep all your records, you simply need to work your way down the list at the end of the year to ensure everything is included.
Start using tax-saving practises. This will most likely require a bit of consultation with a tax professional, but it is certainly work doing sooner rather than later, especially for small business owners. Fringe Benefits Tax (FBT) can have a significant impact on both your business and your employees income, but FBT has some fairly complex regulations that mean if you organise things correctly, you can minimise that impact. For example, if you hold a staff party after hours outside the office, it would most likely be subject to FBT, while hosting the same party during office hours and at the office would be unlikely to attract FBT. This article explains FBT in more detail.
The media regularly runs stories on highly successful individuals and businesses that pay far less tax than you would expect. They do this by adopting as many tax-minimising practises as they can – without crossing over the line into tax avoidance or tax evasion – and there is no reason why you can’t use all of those tax-minimising practises too!
By Jennifer Lowe