Updated May 2024

With the end of the financial year approaching, now is the perfect time to start thinking about your tax planning strategies to ensure you’re in the best possible position.

Why is tax planning important?

Tax planning helps you manage your tax obligations effectively, allowing you to maximise your after-tax wealth. This is especially important now, with the rising cost of living and borrowing expenses. Simply put, careful tax planning gives you more financial resources to achieve your goals.

Is tax planning relevant to me?

If you lodge a tax return and receive a tax assessment, tax planning should be on your radar.

It’s important to note that the Australian Taxation Office (ATO) has increased its focus on recovering small business debt accumulated during the COVID-19 pandemic. Understanding what taxes are due, when, and by whom is crucial for managing personal and business cash flow and preventing financial distress.

What does tax planning involve?

Tax planning starts with understanding your year-to-date performance and forecasting your profits and taxable income for the rest of the year. Regardless of whether you’re an individual, part of a family group or part of a large corporation, the principles remain the same.

The tax planning process explained

1. Identifying one-off events: We identify and consider any significant events that took place throughout the year (anything that could impact your taxes, such as buying or selling property, changes in trading conditions, new business opportunities, or personal events like retirement and building superannuation). Once identified, we factor these events into your forecast position.

2. Forecasting and strategy: Now the fun starts! Once we’ve established your forecast position, we work with you to identify options to reduce, mitigate, or defer your tax commitments. We consider the tax impacts of various strategies, then work through various forecast scenarios to help you determine which strategies to implement.

Strategies we consider include:

  • Ensuring superannuation contributions are paid by year-end
  • Considering additional super contributions within caps and in line with your wealth creation plans
  • Writing off bad debts before year-end
  • Scrapping worthless stock and equipment of nil-value before year-end
  • Taking advantage of immediate asset write-off concessions
  • Maximising prepayments subject to prepayment rules

We also ensure you’re structuring your asset ownership and managing your flow of funds and transactions throughout your structure effectively.

3. Implementation: Based on your decisions, we provide an action plan to implement before 30 June, helping you finish the year calm and in control.

Key tax planning areas to consider in 2024

Temporary full expensing

The temporary full expensing concession ended on 30 June 2023. With more stringent depreciation rules expected from 1 July 2023 onwards, maximising this concession is critical for eligible businesses.

Division 7A

If you operate a company, be aware of the very specific rules around extracting profits and cash. Division 7A rules, which now extend to trusts, can have significant adverse tax implications.

Reviewing and forecasting inter entity and owner loan accounts is critical.  The determination of appropriate dividend strategies and the repayment of loans can mitigate any of these hidden tax nasties if done before 30 June.

Trusts

Trustees must now determine in writing how to treat trust income before 30 June. Failure to do so can trigger an assessment at trustee level with the adverse application of a 45% tax rate to the whole assessable income of the Trust.

We assist with the preparation of distribution minutes that comply with the terms of your deed and achieve the most effective distribution strategy and tax outcomes for family groups.

Superannuation

Superannuation contribution strategies should be carefully considered as part of your overall wealth and retirement planning. The concessional contribution cap for 2024 is $27,500, and unused contributions can be carried forward if certain conditions are met. This can be powerful tool to build wealth within your super fund and reduce your taxable income for the financial year as the concessional contribution can used as a deduction.

What should you do now?

The above is just a guide to some of the key themes and actions we discuss with our clients in the final quarter of each financial year. This is often the time we provide the most value and impact to our clients’ financial and taxation affairs. 

Each client’s circumstances are unique, and every year can bring different challenges and opportunities.

The important takeaway is that optimal year end positions can only be achieved by implementing strategies PRIOR to 30 June.  After 30 June is too late!

We can help you get your 2024 tax planning underway

Chat with our experienced accounting team  

Our team of specialists can help you create a customised tax planning strategy.

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This article was written by Director Kylie McEwan and updated by Manager Troy Nolan.

Disclaimer: The information provided in this article is factual in nature and objectively ascertainable and, therefore, does not constitute financial product advice. Importantly, the factual information that has been supplied does not take into account your personal circumstances, objectives or goals.