Do you dread tax season, feeling like a significant chunk of your hard-earned profits is slipping through your fingers? Are you confident you’re taking advantage of every opportunity to minimise your tax liabilities? Many Australian businesses unknowingly leave money on the table due to a lack of strategic tax planning.
For the 2023/2024 financial year, businesses face two primary tax rates: 25% for eligible small businesses and 30% for all others. That 5% difference can significantly impact your profits, so it’s vital to ensure you’re paying the correct rate and taking every opportunity for tax minimisation.
This guide will help you identify potential areas for improvement and empower you to take control of your tax position with GTB.
Are You Maximising Your Tax Position?
Take a moment to reflect on your current tax practices. Are you truly maximising your tax position?
- Are you paying the correct tax rate? To qualify for the lower 25% rate, your business must have an aggregated turnover of less than $50 million, and less than 80% of your income should be passive (interest, dividends, rent). Are you meeting these criteria?
- Do you have a system for tracking expenses? Keeping accurate and organised records is crucial for claiming deductions. Do you have a system in place to track receipts, invoices and other supporting documentation?
- Are you claiming all eligible deductions? Many businesses overlook potential deductions for expenses like office supplies, travel, marketing and even depreciation on assets. Are you leaving money on the table?
- Are you leveraging available tax concessions? The Australian government offers a range of tax concessions and incentives to support businesses. Have you explored the instant asset write-off, R&D tax incentives, or small business CGT concessions?
- Is your business structured tax-efficiently? The choice between operating as a sole trader, partnership, company or trust can significantly impact your tax obligations. Have you considered the tax implications of your current structure?
If you hesitated on any of these questions, it’s time to take a closer look at your tax planning strategies.
Strategies for Minimising Tax Liabilities
Here are some practical tax strategies to help you minimise your tax burden and free up more cash flow for your business:
- Claim every deduction you’re entitled to. Keep meticulous records of all your business expenses, including rent, utilities, office supplies, marketing costs, travel expenses and depreciation on assets.
- Explore tax concessions and incentives. Take advantage of opportunities like the instant asset write-off, R&D tax incentives and small business CGT concessions.
- Choose the right business structure. Consider the tax implications of operating as a sole trader, partnership, company or trust.
- Forecast your cash flow. Plan for tax payments throughout the year to avoid penalties for late payments.
Check out our additional tax resources for more.
The GTB team is here to guide you through these practical tax planning strategies, one by one, helping you claim every deduction you’re entitled to, explore tax concessions, choose the right business structure and more.
So, you’re running a small business in Australia. You’re hustling and working hard, but taxes are eating away at your profits. The good news is that smaller businesses have a lower tax rate, but you need to figure out if you qualify. How? Start with your FREE free consultation, and let’s find out which tax minimisation strategies will work best for you.
