End of Financial Year – Tax planning tips

The End of the Financial Year (EOFY) is an excellent time to assess your organization’s financial position and plan ahead. It’s also an opportune time to re-evaluate spending and to identify operational cost savings.

What is tax planning?

Tax planning is a strategy to minimise your tax liability through the best use of available allowances, deductions and exemptions. It allows you to understand the year-to-date performance of your business and forecast ahead. 

Strategies to consider:

Your accountant will be able to provide you with your profit and loss position. Together you can then consider some strategies to minimise tax such as the following:

1. Division 7A

   Your accountant can review your books and ensure that director’s drawings have been taken care of before the end of the year. They can also advise whether it is better to consider a Division 7A loan. Please note - Division 7A has serious adverse taxation implications hence it is important that you talk to an accountant regarding this.

2. Trust

   If your structure includes a Trust entity, the trustee must determine in writing how to treat the income of the trust prior to 30 June. If this is not done, the default beneficiary clauses could be triggered resulting in profits having to be distributed, perhaps not where they were intended or worse still, the trustee could be assessed on the entire assessable income of the Trust at the highest marginal tax rate.
   
   An accountant can assist with completion of distribution minutes and resolutions, working with you to achieve the most effective distribution strategy and tax outcomes for your family group.

3. Temporary full expensing

   Temporary full expensing is proposed to come to an end on June 30th 2023. Therefore, if you wish to invest in any asset and take the benefit of the instant asset write off this is the time to be doing so.

4. Superannuation

   In some cases, the final wages of the year are processed before 30th June 2023. If this is the case, you may want to consider paying the super before 30th June 2023 so you can get the benefit of paid super and reduce your tax liability. You could also look at personal super contributions to reduce personal tax.

5. Bad Debts

   Review your customer invoices and if you know that they are uncollectable then consider writing off the bad debt. 

Is your business prepared for the financial year’s end?

All businesses need:

• A summary of income and expenses
• A stocktake to determine the inventory value as at 30th June 2023
• Goods and services tax (GST) reports
• Superannuation, and pay as you go (PAYG) tax withholding reports for the full financial year
• Any documents containing details of any election, choice, estimate, determination, or calculation you make for your businesses’ tax and superannuation affairs, including how this was made
• To ensure that financial information complies with current tax requirements

How we can help

At this EOFY, speak to your local TaxAssist Accountant to arrange a face-to-face or online consultation to discuss your financial performance and for expert tax planning advice. Give us a call on 1300 513 332 or make an enquiry here.

Date published 23 May 2023 | Last updated 23 May 2023

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.