As a small business owner, you have to juggle numerous hats at the same time. Apart from taking care of achieving bottom line, you have to burn midnight lamps to organise critical operations like finances and tax planning.
Tax planning may seem like taking a walk in the park. But, in reality taxation can be a real headache if you have too many things on your plate. It is where you have to put a well-thought-out strategy into place.
With the 2021 financial year coming to closure, there are certain things that you need to consider for making your small business tax compliant. The new guidelines by ATO not only present challenges, but also amaze opportunities to save tax and make smart business decisions.
With the EOFY coming to an end, there’s still some time left to reduce the tax obligations. Here are a few things that you need to consider:
Instant Deduction of Assets that are Less than $20,000
Certain small businesses have to struggle with constant and existing depreciable assets. These are usually written down at a value of less than $20,000 at the end of every financial year. They can be deducted from these assets immediately to minimise your tax liabilities. If you are a small business, you need to apply the simplified depreciation rules to claim asset write-off.
Check the FBT Exempt Tools and Solutions
Purchasing tools of trade and other FBT exempt items for small business owners is an effective way to get tax benefits. Packaged items like handheld or portable tools of trade like computer software, electronic organisers, digital cameras and mobile phones can give your small business tax benefits. When structured correctly, the employers are entitled to a tax deduction for employee reimbursements, you can claim the GST input credit and employee’s salary are reduced by the GST.
Carry Over the Income
During tax season, it’s ideal for small businesses to defer their income to minimise income and maximise the expenses in order to bring down assessable income and tax. In order to do this, you need to defer income and carry it forward in the following years. While you have to eventually pay the tax on what you have earned, you have already saved money.
If you are a small business owner and want to optimise your taxes, SMART Financial Advisory is here to help. We help you understand the nuance of taxation for small businesses and ensure you get the best outcome.