As 30 June draws closer, tax is definitely a hot topic for business owners. From company structures to super contributions and even those annoying car log books, there’s always something to consider when trying to reduce your tax bill.

To keep you in the loop, I sat down with Director Bradley Conn to chat about his go-to tactics for tax minimisation heading into the EOFY. Watch the full video below.

 

 

1. get your business structure right

John: What’s your number one thing you talk about when you cover tax minimisation with your clients?

Bradley: Tax minimisation. It’s one of those things that everyone wants, but sometimes we don’t know where to start. I think for business owners, John, the big thing for me is business structure. If you don’t get that right, it can cost you a lot of money in tax.

Corporate tax rate in Australia for SMEs [small and medium enterprises] is 25%. Individual marginal tax rates are 47%. So, you know, there’s a big gap there. If you get that right, there’s plenty of tax to be saved. Tax minimisation starts with the right structure.

 

2. meet division 7a minimum repayments

John: A lot of that comes down to whether you’re taking the money out of the company or not, doesn’t it? And that’s where you probably hear us talk about Division 7A. Is that one of the other things we need to watch from a tax perspective?

Bradley: It certainly is. If you can take advantage of the corporate tax rate because you’re leaving the money in the business, that’s great. You park your tax rate at 25%, but if you want to take that money out, there’s various ways and means in which you can take it out tax-effectively.

That’s when we start talking about Division 7A, which I know is a bit of jargon, but it’s something that has to be managed for tax purposes. But it can actually be managed really effectively for tax minimisation.

John: And so the big part of that is making sure we’ve done our minimum repayments for the year, isn’t it?

Bradley: Correct. You’ve got to comply with all the rules associated with Division 7A loans, otherwise the ATO gets cranky. So, you need to get that right well prior to 30 June.

 

3. superannuation timing is everything

John: What’s another one that you see people getting the biggest bang for buck for?

Bradley: I like superannuation as a way of tax-effectively managing your money. Disclaimer: no financial advice there, but from a taxation perspective, it’s a really good one that you can use to minimise your tax. However, it’s very, very time-sensitive with regard to when you actually make payments.

So, you need to make the payments at the right time, otherwise you lose the tax benefit. And slightly off-topic, but from a tax compliance perspective – if it’s super for staff – if you don’t get those dates right, there can be some fairly hefty penalties.

John: Yeah, so to get the deduction for your super for staff, you must pay it and have it clear your bank account 30 June. It needs to be in the hands of the super fund prior to 30 June.

Bradley: We’re always saying, a week, week and a half out from 30 June is when you should be making your super payments.

John: And superannuation-wise, if you’re getting a personal deduction for super, that can be worth 47 cents in the dollar.

Bradley: Absolutely. That’s why I say it’s a great mechanism by which you can actually get some really tax-effective savings in the company or as an individual. It’s one of the best tools for tax minimisation when used correctly.

 

4. don’t forget your log books

John: And what about one more that you talk to clients about a lot?

Bradley: Car log books. I know they’re a pain, nobody likes doing them, but if you use your car a lot for tax purposes, they’re a great way of actually getting some really good tax benefits.

On the other hand, if you’re trying to claim and you haven’t got a legitimate or a complying log book, that’s when the ATO can really come in swinging. So, log books- yeah, massive pain -but they last for five years. So, get it done, and then you’ll maximise your tax benefit on your car. Another tax minimisation tactic that’s simple but effective.

 

free tax planning ebook

Looking to keep more cash in your pocket this tax season? Our free FY25 Top Tax Tactics for Business ebook is packed with practical tips to maximise deductions and level up your tax strategy this financial year. Click below to download your free copy.

 

 

we’re here to help

If you have a burning question on your mind, you’re probably not alone! If you’d like us to answer any questions please reach out to your usual advisor at businessDEPOT or give us a buzz on 1300 BDEPOT.

 

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