A common misunderstanding among business owners is that your tax bill is solely reliant upon your tax return preparation. In our experience, most successful businesses in mining and resources begin their tax planning in July… at the very beginning of the financial year. However, if that ship has sailed, your next best opportunity is now, in mid May. With six weeks left until the end of financial year, you may still have time to implement tax-effective actions that can significantly improve your tax outcomes.
While careful tax return preparation is important, the fact is, most tax saving mechanisms need to be implemented before 30 June. The earlier we identify the issues, the more time you have to explore the options, arrange your cashflow and implement a plan to reduce or avoid the need to pay unnecessary tax.
Armed with your financial reports from July to April, we can estimate your income and expenditures to calculate your expected tax obligation for the whole financial year. And that’s when the questions begin!
Our far-reaching questions will provide answers for reducing your tax bill, deferring tax to ease cashflow and making the most of deductions and concessions available to you. For example, you may have been planning to buy vehicles or equipment or make other capital expenditures early in the new financial year. It may be prudent, however, to bring those purchases forward to the current financial year.
Similarly, we might ask about debtors, bad debts and inventory valuation methods. These may allow you to defer income, accelerate deductions or vice versa. The current changes relating to company tax rates and turnover tests provide us with many planning opportunities.
Then, of course, we’ll check your superannuation contributions. Superannuation has a favourable tax rate and it may be beneficial for you to top up your super account. Most importantly, for those of you who utilise a trust in your structure, a carefully considered trust distribution strategy is vitally important to achieve the best tax outcome.
The fact is, there’s a myriad of tax planning measures with short term and long term tax-effective outcomes available to you. My best advice is for you to begin your tax and business planning at the beginning of the financial year and to review it in the fourth quarter.
Leave it too late, and you simply won’t have the time you need to implement tax-effective actions, and you will very likely, pay more tax than you actually need to. While we all must meet our tax obligations, this doesn’t mean we have to pay more tax than necessary, disrupt cashflow, forfeit important goals or impede the smooth operation of business.
Tax planning is among the accounting and business advisory services offered by Resources Unearthed.
Tax planning is an overarching service that includes advice for tax-efficient structures, ownership and holding assets. With these and other tax planning and structuring matters carefully considered, you’ll be well positioned when tax return preparation time comes around, happy in the knowledge that you’ve only paid the tax you should – no more, no less.
If we can clarify any of the matters outlined here, or if you have any other questions about your mining and resources business, please don’t hesitate to contact me, David Pennell, or Brenden Yantsch on 61 (0)7 3007 2000 or firstname.lastname@example.org
Resources Unearthed is a solutions hub that provides integrated financial, legal and business advisory services for executives, professionals and business owners in the mining and resources sectors.
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