Federal-Budget

Oct 2017 3 Minutes

Tax Planning – A Year-Round Activity

Another 30 June has gone.  Perhaps you don’t intend to think about tax planning until June 2018; however tax planning is an all-year-round event.  If you have any questions relative to your income tax affairs, please don’t hesitate to talk to us at any time during the year.

There are a number of matters that can be subject to ongoing review throughout the year.  These include:

Business Structure

Is your business structure suitable for obtaining the best taxation benefits?  This can be quite crucial if you’re planning to sell your business and the small business Capital Gains Tax (CGT) Concession is going to come into play.  This is a very important concession for small businesses.  With some forward planning, businesses can ensure that they’re going to try to avoid some of the traps such as net asset value of less than $6M.  There’s no tolerance given if the figure is slightly over $6M.

With some forward planning, the value of assets may have been able to be reduced to under $6M, e.g. within the superannuation contribution laws, making a higher contribution to superannuation or investing more in assets not included in the net asset value for CGT purposes, such as your own home.

Trusts

Over the last couple of years, there has been a pleasing change of attitude by the government and the ATO relating to Trusts; however this doesn’t mean that the ATO has become lenient in their treatment of Trusts.

It’s very important to ensure appropriate resolutions have been documented and filed, loan repayments have been made on due dates and interest payments have been paid by due dates.  In general, attention to detail relative to anything to do with Trusts throughout the year is a good policy.

Stock

Another important item for many businesses is stock.

Individual stock items can be valued by different valuation methods.  You don’t have to value all of your stock at cost.  Some pre-planning can result in a significant change of stock valuations.

Research and Development

Research and Development (R&D) is another beneficial item within the Taxation Act that’s available for companies that have spent in excess of $20,000 on R&D activities within the year.

To ensure appropriate records have been kept, documentation is very important and it’s very desirable that we have a discussion with you, if you’re contemplating an R&D project, before you commence the project, so documentation can be prepared and an appropriate system implemented, to ensure all time spent on the R&D project is recorded and costed and that direct expenditure is identified and appropriately recorded in the company’s financial records.

If you have questions on any aspect of tax planning applicable to your business, we suggest that you don’t leave it until June 2018 and have a discussion with us at your earliest opportunity.