A tax planning checklist for small-business owners – Part 1

With the financial year almost over, it is time for small businesses to think about tax planning.

Tax planning is essential. Not only in the lead up to financial year-end, but throughout the year as well. It may sound like a lot of work. However, the more you practice tax planning, the more dedicated you will become to saving yourself real money. Preparing an annual tax plan well in advance of year-end, will give you enough time to take action and keep those hard-earned dollars in your pocket!

Here are our top tips to minimise your tax position before 30 June.


If you are interested in saving some real tax money, make super one of your strategies, not just in the lead up to year end, but throughout the year as well, so that you spread out an otherwise high impact on your cash flow.

Be prepared though well in advance of 30 June and ensure your fund receives the contribution to its bank account before this date. Take care not to exceed the concessional cap, as this will defeat the purpose of the exercise and your excess being taxed at your marginal tax rate.


Did you know that it can be more wealth and tax effective to pay year end bonuses than retain earnings in the business? It is also an ideal time to consider paying bonuses to employees.

Be aware though that bonuses attract Superannuation, so include this when assessing net profit. Bonuses to business owners need to be distributed in line with their personal tax position, and where it is more tax effective to distribute profit than retain in the business.

Director fees

Does your business have one or more Directors that are not employees? One of our many tax saving strategies is to consider paying Directors what is known as a Directors Fee (if your constitution allows it).

Be aware that Directors Fees attract Super, so you will need to include this when assessing your net profit. Directors Fees should be distributed in line with Directors personal tax position, and where it is more tax effective to distribute profit than retain in the business. Remember to consider your cash flow and ensure the business has the spare cash to pay Directors Fees.

Obsolete stock

Does your business have a room, storage space or even a factory full of old “stuff” that is obsolete, damaged, no longer of worth and sitting around costing you money? Yet another tax saving strategy is to write off old and obsolete stock.

Remember, tax deductions by the business can only be made where the obsolete stock has been disposed of. If your obsolete stock has been neglected and is substantial, the write off can present as a loss position for the business, so keep on top of your annual stocktake procedures.

Bad debts

At this time of year we need to clean out the cobwebs, especially so for businesses where outstanding debtors have been neglected, not chased and remain outstanding over a period of time. Do you have any bad debts? Meaning money that debtors owe you but that you’re unlikely to ever receive. Now is the time to write off any bad debts to assist with minimising your tax liability.

Tax deductions by the business can only be made where a debt has previously been included in assessable income and businesses must have made the decision that the debt is not recoverable, and not merely doubtful – record this in writing.

Stay tuned for Part 2 next month.