Reduce your tax with advanced tax planning

Tax can be a complex and time-consuming area for SMEs. But once you've got a handle on the basics - things like BAS, capital gains and payroll tax - you can start working on advanced tax planning to help lower your tax bill.

Here are some tips on how you, the small business owner, can better handle tax for the financial benefit of your business. 

On assets

"Before tax time, small businesses might like to consider bulk-purchasing assets, which then become deductions," says Scott Cameron of Holzworth Law & Associates. These assets can include, but are not limited to: 

• office stationery supplies
• clothing, such as occupation-specific and protective clothing           
• repairs and maintenance of income-producing property
• subscriptions to business or professional journals.

On expenses

"A business can also prepay certain expenses, such as insurance, before the end of the financial year so that it is prepaying next year's expenses," says Scott. "That then becomes a deduction for this year."

Scott adds that this can benefit businesses with variable year-on-year income. "If a business has an up year this year and a down year next year, it can benefit from levelling out its tax over a two- or three-year period."

On income

"If the small business is run by a company or trust, they could give themselves a pay rise and not take the pay rise but salary sacrifice it to superannuation instead," says Scott.

This would enable the business owner to minimise their tax liability in the first instance and build their superannuation balance at the same time.

On tax concessions 

If you want to lower your business tax, learning about the tax concessions available to you is a good place to start. In particular, ask an advanced tax planner like Holzworth Law & Associates if you are eligible for the Australian Tax Office's small business entity concessions.

These include but are not limited to:

• Capital gains tax - 15-year asset exemption: If you are 55 or older, about to retire and your business has owned an asset for more than 15 years, you do not have to pay capital gains tax when the asset is sold.
• Capital gains tax rollover: Selling a small business asset? Roll over the capital gains tax liability to the replacement.
• Entrepreneur's tax offset: Reduce your tax payable by up to 25% if your business turns over less than a certain amount.

Working smarter

Advanced tax planning is a smart move for businesses. After all, who wouldn't want to reduce their tax bill? Phone a tax planner today to make the most of each dollar your business works so hard to earn.