3 May 2022

If you are in business and only speak to your accountant or tax consultant once a year, I would suggest two things to you. First, you are not getting the most out of your relationship with them. Second, if you are only going to have one meeting this year, it should be within the next two months.

Having constant touch points with your accountant throughout the year and involving them in your decision-making processes could make a huge difference. Not only to your tax outcomes, long term planning and succession outcomes but, ultimately, your overall wealth creation.

At a bare minimum, I would suggest taking the time to meet with your accountant or tax consultant two to three months before the end of each financial year. This is so you can assess your current position, discuss your current and future plans, and assess the opportunities for minimising the impact of income and other taxes on your position.

Let’s take a look at some of the considerations that small and medium business owners should be discussing with their accountant over the next few months.

Temporary full expensing of depreciating assets until 30 June 2023

Where your plans include upgrading of plant or machinery, it could be worth considering the impacts of the temporary full expensing rules to accelerate your tax deduction.

Timing of income and expenses

Consider the timing of your sales and income around the end of financial year as well as the date of signing contracts and settlement dates for sale of assets.

Consider bringing forward some expenses and/or deductions, including acquiring depreciating assets, bringing forward maintenance on machinery, making superannuation contributions or prepayment of expenses.

Loss carry back tax offset

An eligible company can carry back a tax loss it makes in one or more years between 2020 and 2023 and apply it against a tax liability from an earlier year from 2019 to 2022.

Review of business structure

Every business owner should regularly review their structure to ensure it is still the most appropriate for them in terms of tax implications, asset protection and succession considerations.

Additionally, the base rate entity corporate tax rate has reduced to 25% and could offer tax saving opportunities for businesses in this category.

If your business is operated through a Trust, careful consideration needs to be given to appropriate distribution of profits prior to year-end. Valid documentation of Trustee resolutions will also be required to avoid ATO scrutiny and potentially severe tax implications.

Timing of tax payments

Performing a tax planning review prior to year-end can provide opportunities to vary pay as you go (PAYG) instalments, which can help you avoid paying more tax than you need to and improve your cash flow position.

Everyone’s circumstances are unique and the points we’ve outlined are just a small sample of the considerations you should be thinking about and discussing with your tax consultant. Setting aside some time to have these discussions with your accountant may undoubtedly uncover issues and opportunities that will result in overall better outcomes for you and your business.

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