Getting a better tax deal for smaller businesses
You need to be proactive.
But even that only works sometimes.
Larger companies tend to spend more on advice to not only identify current opportunities but to understand the tax impact when acquiring new businesses, selling assets, structuring or restructuring.
We’ve seen many scenarios where businesses seek advice on tax issues once contracts have been signed – at the tidy up stage.
It’s too late at this stage to improve the tax position or unwind a problem.
Understand what’s available to you
Concessions exist for small business entities and other entities if you know where to look. Often business just doesn’t have the time or feel the need to invest to explore anything beyond the compliance basics.
Get your structures right
A lot of companies fall into the trap of looking at their structure once they have achieved a certain level of growth or decide it’s time to make significant changes – like bringing in investors or selling part of the business.
By this time the cost of changing structure is prohibitive.
If you put a structure in place at the start that creates flexibility and tax efficiency, yes it will cost a few more dollars but you will enjoy the tax benefits as you grow plus your structure will accommodate change as your business builds out.
Ensure that income and profits flow effectively
This is a follow on from structure. Once you have the right structure you can optimise the tax efficiency of how income flows to you providing you plan this in advance.
Getting a better tax deal for individuals
Individuals have fewer choices when it comes to minimising tax but there are still opportunities depending on your circumstances.
Salary and wage earners will have limited flexibility over direction of their income. Salary packaging can provide some tax benefits.
Beyond that however it will be more a matter of how you structure your other investments to optimise your tax outcome.
This applies at both an income and capital gains level. The use of trust structures, appropriate negative gearing, and maximising the benefits of franking credits can all assist in reducing your tax exposure.
Business owners and the self-employed have greater flexibility over how they receive their income and you should take advantage of this.
Smart tax planning causes income to fall in the right places and maximises the use of lower marginal tax rates.
All of this requires some focus and attention early in the process. Don’t wait until your tax liability is ‘hurting’ you.
Take advice early and have a tax plan to ensure that your tax outcomes are as efficient as possible.