Introduction
With the rise in interest rates starting to bite into the Australian economy, many businesses will still have profits taxed when their 30 June returns are lodged. Should things continue to be squeezed in the second half of the financial year, the last thing an enterprise needs is to be struggling to pay its tax obligations into the following year. This is particularly so if PAYG Instalments have changed from previous years.
With four months to go, there is still time to act with a bit of planning.
1. Prepare Early for Tax Time
It’s never too early to begin preparing for tax time in Australia. By watching cash flow closely and keeping detailed records, businesses can be ready to file taxes ahead of the June 30th deadline. This can save time, money, and stress when tax time comes around, as businesses can be sure all of the relevant information is ready for the ATO when necessary.
2. Maximise Deductions
Closely monitoring cash flow throughout the year can also help businesses make the most out of deductions and other tax breaks before the June 30th deadline. Keeping abreast of relevant tax law changes can also help businesses make sure they are taking full advantage of deductions available. Consider getting your accountants to prepare a tax planning report outlining likely tax payable without action, and different tax payable scenarios with recommendations to legally minimise tax.
3. File Accurate Income Tax Returns
By watching cash flow and paying attention to the details now, businesses can ensure their taxes are accurate and filed on time before and after the 30th June deadline. This is especially important for businesses that may have multiple sources of income or have their tax situation more complex than the average.
4. Avoid Tax Debt
Filing taxes on time and accurately is the best way to help avoid creating additional problems or tax debt further down the track. Cash flow reports can help businesses pin down any discrepancies and can help identify any issues with their tax return filing before it’s due. This can help businesses avoid creating any additional issues with the ATO following their lodgement.
5. Keep Cash Inflow Intact
Watching cash flow is also important to help a business keep their cash inflow intact. By understanding where the cash is coming from and how much is being received, businesses can devise a plan to evaluate their profitability and ensure they have enough money to keep running. Monitoring cash flow can also help businesses ensure they consistently hold enough cash reserves to keep their business operation afloat if needed. We recommend that clients consider having Three Way Budgets performed.
These are highly accurate and tie in profit and loss numbers to the balance sheet and cash flow statement. This is because Profit does NOT necessarily mean cash due to factors such as debtors, stock and capital financing commitments and tax as noted above.
If you would like more information regarding the above and how we can assist your business by minimising taxation and maximising cash flow, please don’t hesitate to get in touch with us at Tribel Accountants and Business Advisors today!
