2020 has given us a bumpy ride so far but surprisingly we are only weeks away from the end of the 2019/20 financial year so even in the grip of a pandemic time still flies by.

For many of us Covid-19 is likely to have had an impact on what has been achieved this financial year compared to what was originally planned but that doesn’t mean that we should take our eye off the ball leading into the end of the financial year.

Now more than ever it is important to get a handle on your current position and what is coming. Tax planning plays a vital role in mapping out what the future months will look like and can give you a clear path to follow which will help you navigate towards a post Covid world.

We have scripted many articles in the past on what tax planning is and why it is important so we don’t need to repeat that here. Instead, the purpose of this article is to share with you the key outcomes to tax planning so that you can better understand if tax planning is for you.

If you want to:

Maximise your after tax dollars by minimising the tax you pay;
Understand your future cash flow obligations;
Ensure you comply with tax legislation and other governing body requirements;
Take time to reflect on the year that was and lay out plans for the year to come;
Let’s face it, sleep at night knowing your finances are under control;

then tax planning is for you.

There are the standard tax saving strategies you can consider implementing such as:

Making super contributions
Writing off bad debts
Pre-paying expenses (subject to prepayment rules)
Reviewing invoicing
Scrapping obsolete stock and/or plant and equipment

Along with compliance obligations to be dealt with such as:

Distribution resolutions being signed off pre 30 June
Division 7A matters reviewed and dealt with

But more importantly, in this current climate you have a new host of stimulus measures to consider. Our role is to make sure you access the support available to you but at the same time measure the impact these will have on your financial and tax position.

Leading up to 30 June and into the future months you should be considering:

Benefits of accessing the immediate asset write off – sitting at $150k up until 30 June 2020
Accessing the 15 month investment incentive providing accelerated depreciation to businesses
JobKeeper eligibility and subsequent cash flow implications
Cashflow forecasting the effect of deferring tax obligations and accessing other expenditure relief such as reduced rent or finance deferrals – the debts will still be there so what is the impact of repayment down the track

In summary, whilst we acknowledge that the world is a different place and priorities for many have changed, tax planning is still a critical element to most taxpayers and can help you on your path to achieving financial success.

For assistance with your 2020 tax planning call your Davidsons team member or contact us at info@davidsons.com.au for more information.

Disclaimer: this information is of a general nature and should not be viewed as representing financial advice. Users of this information are encouraged to seek further advice if they are unclear as to the meaning of anything contained in this article. Davidsons accepts no responsibility for any loss suffered as a result of any party using or relying on this article

Tax planning in 2020 – as important as ever