Here are our top five tax planning tips for 2018. It’s early June now, and a perfect time to go over these tips.
1. Bloody Get It Done
The emphasis is with the word bloody, because it is a lot simpler these days to get tax planning done. Most of you in small business should be in the cloud and your bookkeeper’s got all your books in order. It is so much easier now to get tax planning done and inexpensive from your tax accountant.
Years ago, we used to have to crunch a client’s figures, get them all in order, then talk to them and do some extra planning and it was quite expensive to get this done.
These days we can look straight into your cloud based file, your book keeper’s done a good job and we can get it done for you at no huge cost. Bloody get it done. It’s early June.
2. Deferring or Bringing Forward Income
Deferring or bringing forward income, and we can say the same for expenses as well, either deferring or bringing forward expenses, is purely based on a financial year to financial year difference in what sort of money you’re going to make in business.
If you’re looking to make some decent money in the 2019 financial year, you might look at bringing forward some income into the 2018 year and holding off on some of your expenses until the 2019 financial year. This way your 2019 figures should be lower than originally forecast.
Deferring or bringing forward income is all about the difference between your profit from one financial year to the next. If they’re going to be fairly similar or there is a slight increase or decrease, there’s no real big deal to deal with tip number two.
3. Write Off Assets Purchased Under $20,000
Number three is the write off of assets which are under $20,000 ex-GST. In the budget a couple of weeks ago, I mentioned that this is a really good kick up for small business. If you’re getting towards the end of a financial year, which we are now, you can race off to some of the places where you can purchase assets for less than $20,000 and immediately write them off. It’s a really good one for small business. If you need any equipment, don’t hesitate to go out and get it in June.
4. Superannuation Contributions
Super Contributions is still a good one. Generally we talk about a 15% benefit there so the money going into Super’s taxed at 15%, whereas if you receive it yourself, very generally, it will be taxed at about 30%.
There is a benefit here by putting Superannuation away for yourselves. Whether you do this can also depend on your stage of life, you’ll need to get some advice about that, but very generally speaking, you can put 25 grand into Super and there is a 15% benefit.
5. Structure and Restructure
This one’s the big kicker folks and the one that you’ve really got to concentrate on and, make sure you get it right. It’s restructuring. With restructuring, I’d mentioned recently about keeping things complex with a tax structure. If you are stuck in a company structure, make sure you look at it now, because you do have the potential to restructure on the 1st of July 2018.
The government changed the rules a couple of years ago to allow you to move between structures, companies, partnerships and trusts for commercial reasons. There is a very good commercial reason to get into a trust and that is, to give you all the business flexibility you need.
This is why restructuring is really important. Very hard to do it five or six years ago, much easier today. If you’ve got less than 10 million turnover in your business, you can restructure.
The other part about restructuring is, what other things can be put in place from the structuring view point before the 30th of June, before the horse has bolted as we call it. You might want to put in place a Self-managed Super fund or you might be wanting to put in place another trust structure for your investments to protect your assets from the working capital of the business. There are a number of reasons why you may want to restructure, and you’ve got to do it before the 30th June. This is because you’ve got to get things in place and ready for the 1st of July 2018, whether you’re going to start trading under a new structure or there is a change your circumstances. So, this one’s the most important one folks, number five – restructure.
It’s not too late, these are the five tax planning tips you need to heed, it’s as simple as that. There’s other little rats and mice you can do with tax planning, knock yourself out, because these are the five main ones, and good luck with it. Do it now.
Pat Mannix, Partner, Paris Financial