As 30 June starts to come into view, business owners should take the time to estimate how the 2020/2021 year will end up, take a snapshot of the year and determine what tax liability is likely to result and most importantly what the options are to minimise those liabilities.
A good rule of thumb for any business owner is to defer taxes whenever possible but be cautious not to enter into any transactions that otherwise aren’t commercially sound. Legitimate tax deferral strategies can result in applying short term savings to better use, including into working capital to grow revenue and profits for the next year.
Now is the time to get a handle on how your income is going to translate into a tax liability and take some pre-emptive steps to minimise it. Only focussing on the tax bill is a short-sighted approach, you also need to look at the whole of the business including the way it operates, its likely future needs, and the financial position and objectives of the owners.
Conducting a Year End Snapshot Report with your Mazars advisor ensures there are no surprises when tax time approaches.
During a Snapshot Report discussion, you can expect:
- A robust discussion around your 2021 results.
- A projection of your income tax payable for this year, the amounts owing and timing of tax instalments for next year.
- A summary of options for the mix of salary (and tax to be withheld), dividends (where appropriate) and the tax benefit of superannuation contributions to be paid this year.
- Advice on tax planning initiatives that may be undertaken to minimise income tax for the current year, including a review of your current structure to determine if anything needs to be changed.
- Determine how Family Trust income is to be distributed so Trustees’ Resolutions can be prepared before 30 June.
- A review of your superannuation fund position to determine if any action is required prior to June 30 as a result of the latest superannuation changes.
Where circumstances present, it would be prudent to consider what contribution and income stream strategies in superannuation are available.
Our Mazars advisers are here to assist business owners to realise the benefits of conducting a year end Snapshot Report of their business, keeping business owners on track to achieve profit growth well into 2021. Contact your usual Mazars adviser to book your year end planning meeting or contact one of our business advisory specialists via the form below or on:
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