Tax planning checklist

The end of the 2011 financial year is fast approaching, and if you have not already done so, it is time to implement some tax planning initiatives.

Listed below are some examples of tax planning initiatives you can implement for your business. This is intended to be a guide and does not cover every possible tax planning activity. 

To be done before 30 June 2011:

Financial affairs

  • Ensure your financial affairs are reconciled, accurate and reliable. Without this you cannot make any informed tax planning decisions
  • Reconcile and review balance sheet. This is essential to properly ascertain future cash flow management issues
    This includes reconciling the following:

o    Receivables – so you know if you can write off any bad debts

o    Inventory – so you know if you can write off or write down the value of stock

o    Investments - to assess whether these can be sold to offset gains or losses

o    Outstanding tax liabilities

o    Payables

o    Loan

o    Bank accounts

  • Reconcile and review profit and loss, ensuring all capital items greater than $100 are capitalised and also identify one-off abnormal revenue or expenditure. For example gains/losses on sale of an asset, bad debts or revenue from insurance claims, as the tax treatment may differ and may require specific records to be kept
  • Prepare a statement of net financial position across a family trust group (taking into consideration the market value of assets, debts and other financial liabilities)
  • Have realistic profit/loss and cash flow forecasts for the next 12 months. This will allow your advisor to identify opportunities to defer current liabilities if you are likely to be in a loss position in the next year
  • Clearly defined short (1 year) and long term (10 years) goals so you can factor in changes in personal circumstances which may impact your financial position and potential earnings, for example retirement, or if it is likely that new assets will be purchased in the short or medium term
  • Deal with tax issues before 30 June including director’s loans, deciding on trust distributions to beneficiaries, declaring dividends and ascertaining capital gains or other one-off transactions. 
  • Check to see if any debts can be written off as bad debts
  • Write off or write down the value of any obsolete or old stock
  • Repairs – review and complete any repairs to workplace and/or equipment
  • Realise any unrealised losses (capital or revenue losses) which can be used to offset capital or revenue income
  • Consider making charitable donations (avoid making if you will be claiming a loss for the year)
  • Ensure staff bonuses are qualified and documented to enable the deduction to be claimed for bonuses accrued
  • Pay tax agent fees
  • Pay accrued leave loading, even if leave was not taken
  • Research & development expenditure – ensure projects are registered, project plans are completed and all eligible costs are included in claims for deductions
  • Throughout the year ensure all employee super contributions are paid by their due dates in order to claim the deductions. If the super for quarter four (due 28 July) is paid before 30 June, may also get a deduction for this
  • Ensure foreign exchange losses are realised so the deduction can be claimed
  • Conduct a shareholders’ meeting before 30 June to approve directors’ fees in order to claim a deduction for them
  • Review the effective life of business assets to determine if any furniture, fittings or plant and equipment items are obsolete, scrapped or sold and that they are also accurately valued
  • Consider running any staff training before 30 June
  • If you are a small business with an aggregated turnover less than $2 million consider purchasing small business assets less than $1,000 to get an immediate deduction
  • Also consider purchasing any FBT-exempt work items for employees before 30 June, such as laptops, mobile phones and other tools of the trade (FBT rules apply)
  • Small business with an aggregated turnover less than $2 million may be eligible for a deduction on prepaying expenses (expenses may include items such as rent on business premises) as long as the prepayment is not for a period exceeding 12 months.
  • Consider deferring sales to after 30 June
  • Consider postponing the realisation of any assessable gains such as capital or foreign exchange until after 30 June
  • Consider deferring the disposal/sale of an asset that would result in a capital gain until after 30 June
  • Consider CGT and /or depreciation rollover relief where possible.
  • Recognise any unearned revenue at 30 June
  • Pay additional money into your super before 30 June
  • Ensure you haven’t exceeded the superannuation concessional contribution limits. For the 2010/2011 financial year this limit is $25,000 or $50,000 for those over 50 with a super fund balance below $500,000
  • Check to see whether you are entitled to the Federal Government’s co-contribution for personal after-tax contributions made up to $1,000.

 Maximise deductions

Minimise and defer income



Ensure all trust income has been distributed and in the most effective manner, taking into consideration the tax status of the beneficiaries.

Varying your next PAYG instalment

As part of the 2011 tax planning process, you should also consider whether it is appropriate to vary down your next PAYG tax instalment.

This is most relevant for businesses that have had lower profits in 2011 than in 2010. We can assist with reviewing your instalment obligations as part of your June BAS reconciliation.

If you have not already done so, please contact us for assistance with your year-end tax planning.

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About Author

Tanya Moran
Tanya Moran

Tanya Moran is a Senior Partner and the Lead Taxation Partner of Azure Group. She has more than 20 years' experience working with a large array of businesses from small accounting firms to large international corporations.

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