Now is the best time to start planning your taxes for FY22. If you haven’t already, the best place to start is with your accountant. MARISSA TADDEO speaks to Butler Settineri Associates Ryan Taddeo and Steele Thornton to gain some insights into tax considerations for business owners as the end of the financial year approaches.

In an ideal world, taxes would consume very little of our time and attention, but in reality they more often than not keep business owners up at night.

Preparing for tax time requires careful planning, budgeting and monitoring to not only allow business owners to estimate the amount of income tax payable for the year, but also implement appropriate strategies to help minimise that final amount to be paid at the end of the tax year.

As Butler Settineri Associate Ryan Taddeo explains, it enables business owners to plan for the next 12 months’ tax liabilities from a cashflow perspective.

“No one likes tax surprises and tax planning ensures these surprises can be avoided,” Ryan said.

“Tax planning starts valuable discussions about longer term planning opportunities, such as restructures or superannuation and retirement planning.”

The recent Australian Taxation Office (ATO) guidance on Trust distributions has gained substantial media attention, with Ryan saying it represents the biggest change to the taxation of Trusts over the past decade.

“Many Australian business owners have a Trust for asset protection or taxation purposes,” he said.

“For many years, the Trustee of a Trust could resolve to distribute its income to members of the family group, such as adult children at university with lower incomes, and therefore benefit from splitting the income for tax purposes.”

“The ATO’s new guidance suggests that these distributions may be taxed at the highest marginal rate in certain circumstances.”

Ryan advises Trustees who have not spoken to their accountant yet to do so immediately, as it is vital the pre-30 June Trust Resolutions are drafted correctly in light of the new guidance from the ATO.

“Trustees should also have a discussion about whether a Trust structure is still the most suitable for their business operation, or whether it is time to discuss a restructure opportunity,” he added.

Butler Settineri Associate Steele Thornton highlighted some other areas the ATO will be targeting when taxes for the current financial year are lodged.

“Working from home deductions as a result of COVID is at the top the list,” Steele said.

“The ATO will be looking to ensure appropriate records are being kept and only work-related costs, or a portion thereof, are claimed.

“They will also be double checking costs that are typically associated with working in the office – for example travel, parking and laundry.”

Steele also gave a warning to those who have recently jumped on the cryptocurrency bandwagon, saying they are likely to receive a “please explain” from the ATO if they fail to declare any profits.

He says this is an ongoing area of concern for the ATO and something which is firmly in its crosshairs.

“The ATO has advised it will continue to monitor the purchase and sale of assets through data collection, and it’s a timely reminder for everyone to consult a registered tax agent if they are unsure of their reporting obligations,” Steele said.

Butler Settineri Associates shared their three top key tax planning tips heading into the end of the financial year.

  1. Consider temporary full expensing – businesses that have an aggregated turnover of less than $5m can claim an immediate tax deduction for the business portion of the cost of an asset if it is installed and ready for use pre-30 June, 2022.
  2. Catch-up superannuation contributions – if taxpayers have a super balance of less than $500,000, they are able to carry forward unused concessional contributions from a previous financial year.
  3. Losses carried back offset – COVID-19 was tough on many Australian companies. Certain companies can choose to carry back losses to earlier financial years in which they had a tax liability, and in effect receive a tax offset equal to the tax the entity would have saved if it could have claimed that loss in an earlier year.

The more you learn about how tax impacts business, and how to plan for it, the more you can make informed decisions throughout the year and at tax-time.

About Ryan Taddeo

Ryan is a Chartered Accountant and Chartered Tax Advisor, providing tax advisory and compliance services to Australian businesses advising on start-up structuring and guidance, tax litigation support, tax due diligence, restructures, fringe benefits tax, capital gains tax, cryptocurrency, and estate planning and deceased estates.

About Steele Thornton

Steele is a Chartered Accountant with 13 years’ experience across various industries and works closely with high net wealth individuals and small business entities. He has a special interest in Small Business Restructures and Capital Gains Tax advice, and enjoys working closely with his clients to ensure they get the most beneficial outcomes.

About Butler Settineri

For over 30 years, Butler Settineri has put its focus on clients and building relationships to deliver accounting and financial services to WA businesses successfully.

From accounting services to complex financial statements and advice, self-managed super funds and external audits, the team at Butler Settineri achieve an understanding by spending the time to get to know the people they work with.

For more information, please contact Butler Settineri on (08) 6389 5222 or mail@butlersettineri.com.au.