Cash flow benefits

During a client's recent tax planning process, we identified that engaging in proactive tax planning not only had the potential to reduce their tax burden for the year but also resulted in a significant cash flow benefit.

For instance, we were able to secure an immediate refund of $20k in PAYG instalments instead of waiting until their 2023 tax returns were completed.

If you wait until after 30 June to consider your tax exposure, you are adopting a reactive approach, and by then, you might have missed out on the majority of tax planning opportunities.

An excellent example for the current financial year is the immediate asset write-off, which is scheduled to end on 30 June 2023.

This tax incentive enables you to claim the full cost of assets, such as plant, equipment, vehicles, software, and websites, in the year of purchase instead of claiming expenses over the asset's estimated effective life, which could be anywhere from 3 to 20 years.

To take advantage of this incentive for vehicle purchase, it is recommended to plan early and ensure that the vehicle is delivered before 30 June, which is required to be eligible for the concession, considering the current supply chain issues.

Maximising tax savings

Businesses can explore various short-term tax-saving options, including paying their June quarter super liability before 30 June, writing off bad debts, delaying invoices until 1 July where appropriate and prepaying business expenses.

Tax planning is also an excellent opportunity to discuss your broader tax affairs with your accountant, like reviewing your trading structure, planning trust distributions, or accessing Small Business CGT Concessions if you plan to sell your business.

Due to the ATO's new position on the Anti Avoidance provision, S100a, trust distributions are going to be heavily scrutinised in the future. The ATO's enforcement of these provisions is going to greatly impact the ability for trustees to distribute income like they have in the past.

In short, the cash now needs to follow the distribution of profit. The days of splitting income to the adult kids or other family members are all but over.