Tax Planning doesn't need to be Taxing!

Well it's that time of year again where we become obsessed with maximising our tax deductions prior to year end. Take us back 50 years ago and tax planning allowed a little more creativity, however the taxman-ian devil (aka the ATO) and that pesky thing called tax legislation has nipped quite a few strategies in the bud, but do not fear as there are still things that can be done to keep your tax to a minimum (within the intent of the law of course).

Some things we want to highlight first:

1. You shouldn't make business and investment decisions based on tax alone. The decisions need to align to your why and purpose and fit your goals and plans, ie, don't just buy or invest into something for a tax benefit.

2. The structure you conduct your business affairs within is the ultimate tax planning strategy as it ensures you are only paying your fair share of tax. We are always here to help with your tax structuring and have some tax masters in our ranks at the ready.

3. Some tax planning relates to timing benefits, ie bringing forward the tax deduction or deferring income where possible OR tax deductions where CASH needs to have been spent.

4. We cannot create tax deductions out of thin air as our magician certificates haven't arrived in the post yet and knowing snail mail may never arrive, ie we can't just claim the maximum😉

So here are our TOP TEN tax planning tips and tricks (say that a few times in a row, haha):

1. Defer income, ie, delay invoicing where possible

2. Addback unearned income, ie, income invoiced in advance but services not yet performed

3. Review debtors (people that owe you money) and write off those that are not recoverable, ie, they've gone bad (like a prawn in the sun)

4. Review stock and write off obsolete items. Remember to do a stocktake at 30 June - pretty please!

5. Prepay expenses ... amounts of less than $1,000 OR if you are an individual taxpayer not operating a business or small business entity (turnover < $50m) you can claim a tax deduction for 12 months of prepaid expenses.

6. Maximise your superannuation contributions BEFORE 30 June (it needs to be physically paid). The maximum concessional contribution in the 2025 year is $30,000. You can also carry forward any unused concessional contributions from prior years to tip in a bit extra if your total super balance is <$500,000. Woohoo! Want to find out more about super, then check out this blog.

7. Purchase plant and equipment (with caution). You may be able to claim 100% of the cost of eligible depreciating assets that cost less than $20,000 (inc GST) under the the instant asset write off rules if your aggregated turnover is less than $10 million. BTW you need to have it in your hot little hand by 30 June in order to claim it. Assets valued at $20,000 or more (which cannot be immediately deducted) can be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year after that. (PS. We are still waiting for this one to be legislated so it's not a sure thing, so tread with caution). Word of warning: If you are looking at purchasing a motor vehicle your tax deduction will be reduced by the private use component and there is a car cost limit of $69,674. You might want to take a look at our blog on what you can claim for motor vehicles to get more deets on this one and not rely solely on the sales pitch from your salesman. 😉

8. Thinking of going electric? There’s still time for an FBT-free ride. Eligible electric vehicles (EVs) provided to employees can be exempt from Fringe Benefits Tax (FBT)—a huge win for tax planning. The exemption applies to battery electric, hydrogen fuel cell, and plug-in hybrid vehicles under the luxury car tax threshold, first held after 1 July 2022.

   ⚠️ Heads up: From 1 April 2025, plug-in hybrids will no longer qualify—unless they’re already under a novated lease or arrangement before that date. Battery electric and hydrogen vehicles? Still good to go beyond 2025.

9. Maximise your home office claim (because let's face it the post Covid world has normalised this one). There are a few different methods that you can use and wouldn't you know it we have a blog on that too just click here to find out more.

10. Want $500 smackers from the Government? If you earn < $45,400 and you make a personal (after-tax) contribution into your Super you may be eligible for a super co-contribution, where the government contributes $0.50 for every $1 you contribute to super, up to a maximum of $500 ... a bit like a finding a pineapple in your pocket.

    
    

So there you have it folks, your tax planning in a really big nutshell.

If you have got to the end, high 5's and congratulations! hope it hasn't been too much of a taxing read, haha. 🤣 Thank goodness you have some award winning accountants in your corner to look after all of this for you. We do highly recommend that you make an appointment to meet with us to run through your tax planning in mid May or early June to ensure you are doing everything possible pre 30 June, as it's too late after, trust us! and to make it super easy here is the handy link for you. Well that's as good as it nets, calc-u-later!

Disclaimer: This blog is for general informational purposes only. For advice on your specific situation, please contact a tax professional, ie us 😊