This time of year many clients take the opportunity to have a proactive tax and compliance planning strategy before the end of the financial year in order to maximise tax opportunities and minimise risk.
The LT team help clients through this period and ensure that they maximise the tax opportunities whilst keeping compliant. Taxation planning is a difficult process and time and expertise is needed to review the current situation and look at ways to reduce tax exposure and minimise risk.
Example of areas within tax and compliance planning includes:
1 – FINANCIAL STATEMENTS AND BUSINESS REVIEW
• Review year to date results, and profit projections to 30 June
• Review other family member income
• Any capital gains / losses or investment income?
2 – CONSIDERATION OF TAX PLANNING STRATEGIES
Review key super and tax changes before and after 30 June
• Superannuation – $25,000 for everyone – surplus cash for “top up” before 30 June
• Bring forward deductions?
• Defer income? Is cash available prior to 30 June for these strategies?
• Temporary Full Expensing for Asset Purchases – entities with turnover under $50m can deduct the total business portion of asset purchases (both new and second hand) and have these purchased and installed ready to use by 30 June 2021.
• Set up a “corporate beneficiaries” to cap tax at 30% or 26% depending on your circumstances.
TAX COMPLIANCE ISSUES FOR 2021
• Discretionary and Unit Trusts – Trust Distribution Resolutions need to be signed by 30 June 2021 to avoid penalty tax and review the most appropriate beneficiaries to receive the income.
• Dividend Planning – Resolving to pay dividends and executing Dividend Resolutions to ensuring they are effectively paid under tax and corporations law.
• Division 7A – To ensure compliance with loans out of companies and ensuring appropriate loan agreements are in place. Review also any Unpaid Present Entitlements (UPE) and considering whether they need to be made Division 7A compliant.
3 – RECORD KEEPING
• Computer data files – reconciled properly? Is bookkeeping working properly?
• Motor Vehicle Log Books – Have these been kept? Essential in case of a tax audit
HOW WE CAN HELP YOU
Our tax team will work together with you to take care of issues that can have an impact on your future finances. We are highly experienced in tax planning and compliance and can provide a wide range of tax advice for your needs.