Why Tax Reducing Strategies Matter
Let’s face it – no one loves tax time. But for small business owners and franchisees, it’s not just about meeting obligations, it’s about being smart. Tax reducing strategies aren’t about dodging your responsibilities; they’re about making use of every available opportunity to legally reduce what you owe. The key is knowing what’s available, and planning ahead.
Timing is Everything: Bring Forward or Push Back
One of the easiest strategies is simply about timing. If you’re close to the end of the financial year and know you have upcoming expenses, consider bringing them forward. Conversely, if you’re already in a high-income year and expecting less revenue next year, pushing back invoicing might be worth discussing with your accountant. Timing decisions can make a real difference.
Make Use of Instant Asset Write-Offs
The ATO’s instant asset write-off scheme allows eligible businesses to immediately deduct the cost of assets. This can cover anything from laptops and furniture to vehicles or equipment, provided they meet the criteria. Keep an eye on the current thresholds and timing, as they can change from year to year.
Be Strategic with Equipment Purchases
Rather than wait until equipment breaks down, consider updating before 30 June if you’re eligible for immediate deductions. If you’re running a café, think espresso machines; for tradies, maybe it’s time for new power tools.
Super Contributions and Staff Bonuses
Paying superannuation before 30 June for your staff can be a great way to reduce taxable income. Similarly, bonuses for your team that are paid and documented before EOFY are deductible.
Contributing to Your Own Super
Don’t forget yourself! If you’re a sole trader or business partner, personal super contributions (up to the concessional cap) can reduce your taxable income while setting yourself up for retirement.
Prepaying Expenses
Certain expenses can be prepaid up to 12 months in advance. These can include rent, insurance, and subscriptions relevant to your business. If your cash flow allows, prepaying can bring forward deductions into the current tax year.
Maximising Deductions – Don’t Miss the Obvious
Many small businesses miss out on deductions simply because they haven’t recorded or claimed them. Ensure you capture:
- Home office expenses
- Travel and vehicle expenses (logbooks matter!)
- Tools and software
- Accounting and legal fees
- Marketing expenses
Work closely with your bookkeeper to keep everything organised and up to date.
The Power of Tax Offsets
Several offsets may be available depending on your structure and income level. The small business income tax offset can provide a reduction of up to $1,000 for sole traders and other eligible entities. It’s often overlooked, so double-check if you qualify.
Review Your Business Structure
This one isn’t a quick fix, but it’s worth revisiting every few years or during periods of growth. The right business structure (sole trader, partnership, company, or trust) can significantly affect your tax position. It could be worth speaking with a Cotchy accountant to reassess if your current structure is still working in your favour.
GST, BAS, and Cash Flow Planning
Tax strategies aren’t just about the annual return, they should be year-round. Staying on top of BAS lodgements, PAYG, and GST helps manage cash flow and avoid surprises. A proactive approach means fewer headaches and better opportunities to plan.
Leverage Bookkeeping Software
Using tools like Xero properly can make a huge difference. Automate where you can, and always keep those records clean and accessible for tax time.
Small Actions, Big Results
Whether you’re a franchised gym owner, a café operator, or running a retail store, consistent habits throughout the year can yield solid results come tax time. It’s not about major overhauls, it’s about strategy and foresight.
Need Help with Tax Reducing Strategies?
If you have any questions about tax reducing strategies or how to apply them in your business, get in touch with our team today. We’re here to guide you through tailored approaches that help you legally reduce your tax while staying compliant.
For expert support on tax reducing strategies, contact Cotchy today and let’s get your business thriving.