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Slash your tax bill with these last-minute tips

Roger Mendelson
29 June 2017 2 minute readShare
Slash, cut, tax bill

Most business owners put off planning their tax until long after 30 June, not realising that by then it’s too late to take advantage of many of the steps they could have implemented.

If you want to see a benefit this tax time, anything you wish to claim or write off must be done before the end of financial year and can’t involve any backdating of documents.

If you are audited and are found to have falsely claimed deductions or have backdated transactions, you could potentially face criminal charges or at the very least receive a hefty fine from the Australian Taxation Office (ATO).

The golden rule is “tax deferred is tax saved”; it always pays to defer your tax obligations until the following year to improve your cash resources.

Here are a few quick steps to help improve your cash flow:

Write off old debts

Look through your debt ledger and write off all old debt of over six months or ones that are unlikely to be recovered.

This will reduce your income for the 2016-17 financial year, reducing your business’ tax. It will also result in goods and services tax (GST) being credited in your next business activity statement (BAS), being the GST charged on the written off invoices but not received.

Refer those written off debts to a ‘no-recovery, no-charge’ debt collection agency. Any money ultimately recovered by them can be then added back into your income in the financial year in which the money is recovered.

Buy now, pay later

This may sound counter-intuitive, but if you have a big purchase planned, aim to make the order and receive the invoice before the end of 30 June to pick up the expense.

Simultaneously, negotiate deferred terms with your suppliers so your cash flow doesn’t get hit. That is, order and claim the expense now, but put off paying until the new financial year.

Don’t mess with the ATO

While some businesses will try to push back on payments to their creditors, the ATO has far more extensive powers when it comes to collecting money it is owed and will act quickly and efficiently.

In fact, the ATO is the largest liquidator of companies in Australia.

It is crucial you carry out your BAS payments to avoid hefty penalties. While the ATO will help those who are sincerely making an effort to pay, they will be firm and harsh on those who are deliberately trying to avoid the payment.

Plan for payments and collections

If estimated profits are going to be high this year, try to prepay as much as you can. This might be hard to estimate but, if possible, it will help you by increasing tax deductions for the year. Pay your rent in advance and prepay fixed payments.

As a busy business owner, planning taxes might be the last thing you want to think about but it will be worth it in the end. It is important to plan ahead in order to get the best tax outcome and get your business off on the right foot for a strong financial year ahead.

Roger Mendelson is CEO of Prushka Fast Debt Recovery and principal of Mendelsons National Debt Collection Lawyers.

Slash your tax bill with these last-minute tips
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Roger Mendelson

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