End of year planning is not just about minimising your tax bill. These last months of the financial year are a great time to forecast how your 2016/17 financial year will wrap up and implement some strategies to support your objectives and minimise your tax liability by taking advantage of opportunities that will disappear from 1 July 2017.
The fact that many legislative changes will come into effect post 30 June 2017 means now it is time for early planning. Here are some of the reasons to sit down now with Clarke McEwan and have that year-end planning discussion.
Clarke McEwan will look at your "whole of business", the way it operates, and its likely future needs.
- Use your end of year planning as a means of understanding your financial results to determine what improvements you can influence over the next 12 months and what profit result is achievable. We can help quantify the benefits of future opportunities by using "what-if" scenarios such as investing in more staff, equipment or marketing.
- The small business $20,000 immediate asset write-off currently available to businesses with <$2 million turnover will cease on 30 June 2017. With Company Tax Reform legislation to pass in May which will expand the definition of a Small Business to a <$10 mil turnover this is a window of opportunity for those businesses to bring forward asset purchases to pre 30 June.
- With the Tax Reform looming and changes to the Small Business definition, companies with <$10 million dollars turnover will benefit from a lower 27.5% company tax rate in 2016/17. It is anticipated that companies with <$25 million turnover will be entitled to a tax rate of 27.5% in the 2017/18 financial year. With this in mind it is worth exploring strategies to defer profit until the lower tax rate year.
- Super Reforms come into effect 1 July 2017, including options available for a limited time. Consider this window of opportunity to increase your retirement savings and save tax by taking advantage of higher tax deductible concessional contribution limits of $30,000 for fund member under 50 years of age, and $35,000 for fund member in the 50 years plus age category.
- Income streaming to lower income family members, already important in this financial year will be increasingly important in 2017/18 when new double contributions tax legislation applies to income from $250,000. This division 293 tax result in super contributions being taxed at 30% rather than the 15% once "income" exceeds the limit.
As a guideline, your discussion with us should give you :-
1) an estimate of tax payable for the year ended 2017, the amounts of any tax instalments and the timing of due dates;
(2) a summary of options for the mix of salary, dividends if appropriate, and superannuation contributions to be paid this year;
(3) tax planning initiatives that might be undertaken prior to 30 June 2017; and
(4) determining how family trust income may be distributed so resolutions of trustees may be prepared before the end of June 2017.
This information is intended as a guideline only. Professional advice related to your personal situation is crucial. Request an appointment now