If you’re expecting a surge in business in the 2024-25 financial year that will boost your taxable income, now is the time to plan ahead to make sure you meet your obligations and maximise your cashflow.
Take a look at your expected taxable income for the current financial year (2023-24) - that’s the assessable income for your business minus any allowable deductions. Then, create a projection for your likely taxable income for next financial year based on the factors you can predict.
If a higher income is looking likely for next financial year, now is the best time to consider your tax planning. With the right plans in place now, you could make sure you’re meeting your tax obligations and even explore how to make the most of your cashflow for next financial year. Here are some tips to help you take the next steps.
Speak with your accountant
The best place to start with tax planning is with your accountant. They may be able to help you with specific strategies to suit your business. For example, you might be able to bring forward any invoicing into the current financial year for scheduled work that will be carried out in the next financial year, if it is appropriate to do so.
Your accountant can also help guide you if you are anticipating a downturn during the next financial year.
If you need help to find the right expertise, take a look at our Choosing an accountant information guide.
Consider your expenses
If you usually like to pre-pay your expenses, you might find there could be an advantage to paying them over the coming tax year instead. For example, instead of paying your insurance premiums or equipment rental fees in one payment in this current financial year, you could explore switching to monthly payments over the coming year.
The timing of your purchases and method of financing should be explored with your accountant so the impact on your tax and cash flow can be considered. If your business plans involve purchasing new equipment or business assets, consider how the timing of these purchases can work to serve the needs of your business. For example, you might need to purchase a vehicle for deliveries to help expand your business operations in order to achieve your forecasted business goals, or because it is in line with your business plan.
If you’re not already familiar with the instant asset write-off, now could be a good time to learn about and discuss this tax depreciation option with your accountant.
In general terms, always speak to a professional about your tax. Don’t feel that you need to spend up for the sake of claiming tax deductions. Based on the most business tax rate applicable to you, you could find yourself paying $1 to save 30 cents in tax - and there’s every chance that money could be better used within your business.
Be flexible
If the world has learned one thing over recent years, it’s to expect the unexpected. Even when you have evidence that you’re on track to expect a year of higher income than previous years, it’s important to factor in some flexibility.
Keep a positive mindset, but also take some time to plan for outcomes you might not expect, such as supplier issues or staffing challenges, and keep track of financial news and predictions that may impact your business. Consider how these unexpected scenarios could impact your income and how this might impact your tax.
If your business has received government income such as COVID-19 stimulus payments, remember that you will need to include these as assessable income in your business income tax return. You may also need to consider any other grants or payments in your assessable income.
Expand your tax knowledge
The more you learn about how tax impacts your business, and how to plan for it, the more you can make informed decisions throughout the year and at tax-time. If you’d like to learn more about managing your finances, register for one of our upcoming workshops. You could also use our end of financial year checklist or explore our range of free financial tools and templates to help you plan ahead.
More information
For more tax-time tips, read:
- End of financial year checklist
- Get ahead at tax-time with these expert tips
- How to prepare for a downturn in your income
- Our quick guide to tax deductions
- The ATO's tax time toolkit
For tax advice or specific tax information, please speak to your accountant or check the ATO website for details.
