As a small business owner, you know managing finances is crucial to the success of your business. However, when it comes to tax planning, it’s easy to feel overwhelmed and unsure of where to start.

With the end of the financial year fast approaching, don’t leave it too late to get on top of your paperwork. With our help, let’s work together to make this year’s tax return as efficient and easy as possible! Below, we’ve outlined some key considerations to keep in mind, so you can save money and ensure your business is set up for success in FY24.

Relevant Government Benefits and Initiatives 

First up, have you considered taking advantage of relevant government initiatives, like the Small Business Technology Investment Boost and Small Business Skills and Training Boost? Both of these initiatives provide several win-win benefits for small businesses, such as allowing you to invest in new technologies or upskill employees without your business necessarily having to carry the cost burden.  

From a tax perspective, both of the above programs allow small businesses to claim an additional 20% tax deduction on costs incurred for new technology, digital solutions, training, and employee development programs. To be eligible for the deduction, businesses are required to have purchased the necessary technology or training before the deadlines (30 June 2023 for the Technology Investment Boost and 30 June 2024 for the Skills and Training Boost) in order to ensure they can receive the tax benefit.

Read more about the eligibility requirements and conditions for both the Small Business Technology Investment Boost and Small Business Skills and Training Boost incentives here. 

Temporary Full Expensing

Another consideration for your tax planning is Temporary Full Expensing, which allows you to claim an immediate deduction for the full cost of eligible depreciating assets purchased and installed by June 30, 2023. This tax planning strategy provides a significant cash flow advantage for your business by reducing your taxable income and increasing your deductions, so definitely worthwhile looking into if you need to make any new purchases for your business. You can read more about eligibility requirements here, or talk to an accountant to make the most of this tax incentive, while staying compliant with Australian tax laws.

Loss Carry-Back

If your business has made a loss this year, you may be able to carry that loss back and offset it against profits made in prior financial years. This is called the loss carry-back rule, and it can provide an immediate tax benefit and help reduce your tax liability. 

Put simply, if your business has suffered a financial loss in the current year, you can apply that loss to reduce the taxable income of a previous year in which your business was profitable. This can lead to a refund and provide a boost to your cash flow.  Keep in mind there are specific conditions that must be met and it’s important for you to discuss this with your accountant how it may apply to your unique situation.

Concessional Superannuation Deductions

Concessional superannuation deductions refers to the amount of money that can be contributed to your superannuation fund pre-tax. These contributions are usually taxed at a lower rate than your regular income tax rate, and they help boost your retirement savings. The concessional contributions cap for the 2022-23 financial year is $27,500 (this covers all before-tax contributions — employer super payments, salary sacrifice, and the personal contributions you claim as a tax deduction).

By making concessional contributions, you not only reduce your taxable income, but you’re also investing in your future. However, it’s important to note that there are some rules and limits around concessional contributions, such as age-based limits and penalties for exceeding the cap. Speak to your accountant or financial advisor to ensure you make the most of this tax planning strategy.

Record Keeping and Deadlines

In addition to the above, it’s crucial to keep accurate records of your business income and expenses throughout the financial year. This will make tax preparation much easier and help to ensure you don’t miss out on any deductions or refunds you may be eligible for.

Here are a few tips to help you get ahead of the game:

  • Separate personal and business expenses, and keep individual records for each;
  • Understand your tax obligations; and
  • Meet tax deadlines to avoid penalties and interest charges.

We’re Here to Help!

So, there you have it – some key tax planning strategies to consider before the end of the financial year. If you need help understanding how some of these considerations may impact you and your business, the team at Hoffman Kelly is always here to help make tax planning easy and stress-free. Don’t leave it until the last minute, but contact us today to prepare for the end of the financial year.