As the end of the 2022–23 income year approaches, we have listed a number of ways to minimise your tax liability below.
Defer assessable income
To reduce the tax you will pay for the 2022–23 income year, you might want to consider deferring assessable income to the next income year.
For example, you could delay issuing an invoice so you won’t be paid until after 30 June – that way, the income will be taxed next year. It is trickier if you account for income on an accruals basis – you might have to delay issuing the invoice until after 30 June.
If you are in the process of selling property and the profit will be taxable as a capital gain, you could defer the sale until the next income year – but remember that the taxing point of a capital gain arises on the date that you exchange contracts and not on settlement.
Of course, these tips are always subject to cash flow requirements.
Another way to reduce your tax bill for the 2022–23 income year is to increase your deductions. For example, you could bring forward the purchase of one or more depreciating assets (new assets are currently immediately deductible under the temporary full expensing regime). An immediate deduction is also available for start-up costs and certain prepaid expenses.
Don’t forget that temporary full expensing – which allows an immediate deduction for the full cost of depreciating assets – ends on 30 June this year. To take advantage of temporary full expensing, you must acquire and start to use an asset (or have it installed ready for use) by 30 June 2023.
Charitable donations are a good way to increase your deductions. If you are not sure whether a donation will be deductible, you can check the deductibility status of charities at https://www.abn.business.gov.au/Tools/DgrListing. Every now and again, new charities are added to the list, while others drop off (usually because the time limit for making a tax-deductible donation has expired).
In certain circumstances, you can claim a deduction if you donate trading stock.
Don’t forget to obtain and keep receipts.
Business tax – Quick tax risk checklist
Taxes can be a complex maze to navigate. Below is a comprehensive tax risk checklist to help you assess and strengthen your business’s tax governance, strategy, and compliance. From the boardroom to the tax team and significant transactions, these high-level questions will ensure you’re on the right track to mitigate risks and optimize your tax outcomes.
High level questions for the Board
- What is your tax governance framework?
- What is the risk stance and structural tax settings of the company?
- Do you understand the current (and historic) relationship with the ATO?
- If profits are not fully taxed, why not?
Questions for the tax team
- Are there KPIs that support the organisation’s goals and stated tax risk appetite?
- Is the tax corporate governance clear, and is it is ‘lived’?
- Do you understand the relationship between financial reporting and tax, including GST and indirect taxes?
- Do you understand where you sit relative to your business peers?
- Do you have high levels of assurance over your tax ‘infrastructure’?
- Could you call yourself a transparency role-model?
- Have you received a high assurance rating previously? If not, why not?
- What is your conduct in resolution of tax disputes, including applying the Legal Professional Privilege (LPP) protocol? (The LPP protocol outlines the recommended approach for taxpayers and their legal representatives when dealing with tax disputes and maintaining privilege over sensitive legal advice).
Questions for significant transactions
- Is the position for significant transactions consistent with the risk appetite of the organisation?
- Is the ATO likely to dispute this position? Have you sought certainty from the ATO in the form of a ruling?
- What would happen to revenue collections if everyone did this?
- Has the adviser been given a full scope, or are there areas that have been scoped out that are relevant?
- Are the facts and assumptions underpinning the advice supportable and could be evidenced in court proceedings? What happens if they are wrong/disproved?
Download our tax planning guide to learn strategies and tips on how to minimise your personal and business tax from our Free Resources
This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek tax advice from a qualified accountant at KMT Partners. Information is current at the date of issue and may change.