Like many businesses in our current environment, you may be expecting a downturn in your turnover for the next financial year. We’ve put together some tips on how to prepare from a tax perspective.
From staffing challenges and supplier constraints to customer behaviours and global events, there are many reasons your business might be preparing for a quieter financial year. Here are some things you might be able to do now in terms of your tax planning to get ready for the year ahead.
If your business has been impacted by an emergency event or disaster, call the ATO's emergency support line 1800 806 218 or visit their website.
Take control of your planning
If you’ve taken a look at your expected taxable income (that’s the assessable income for your business after any allowable deductions) for this current financial year (2023-24) and created projections for your likely taxable income for next financial year (2024-25), that’s a great start. By knowing a downturn in your income could be likely, you can take control of your tax planning now.
Speak to your accountant
If you don’t already use the services of a suitably qualified accountant, now could be the perfect time to work with one. Take a look at our Choosing an accountant information guide to help you make the right decision about your support network.
Your accountant can help you with tax planning strategies you might not have considered, such as taking advantage of any special depreciation measures. For example, they might help you explore temporary full expensing or the instant asset write-off which allow you to immediately deduct the business portion of the cost of eligible depreciating assets that are first held and first used (or installed ready for use) for a taxable purpose between the eligible date periods.
Review your cashflow
Depending on your situation, there could be some tax advantages to prepaying some of your 2023-24 expenses in the current financial year. This could include expenses such as your rent, insurance or subscriptions to professional associations. Speak to your accountant for advice, as you may be eligible to deduct up to 12 months of the following year’s expenses in the current tax year.
You might also be able to take a look at your invoicing and delay some of it to next financial year, rather than account for that income in this financial year. Always check with your accountant to make sure this is an appropriate strategy for your business.
If your business makes a loss, you may be able to claim a deduction for it in a future year, offset it as a current year loss or carry back your tax loss. Find out more about business losses and discuss your financial position with your accountant.
Consider other income
If your business received government income such as COVID-19 stimulus payments, remember that you will need to include them as assessable income in your business income tax return.
You may be eligible to apply for a range of small business grants or payments to help support your cashflow. For example, there may be stimulus payments available or the Australian Apprenticeships Incentives Program if you have apprenticeships in your business. Remember to speak to your accountant about whether these would need to be included as assessable income for your business.
Learn about your deductions
If your business is new, ask your accountant about whether you could be eligible to deduct any start-up expenses such as obtaining legal or accounting advice on your business structure, or set-fees such as your ASIC company registration fee.
To help make this easy, keep receipts for all business expenses with notes detailing the nature of the expense and how it applies to your business. Your accountant can then maximise your deductible expenses within the permitted rules.
Even if you have been in business for some time, you might be surprised at some of the items you can and can’t deduct for your business.
Build your tax-time toolkit
The more you understand about your tax obligations and opportunities, the better for your business. If you’d like to learn more about managing your finances, register for one of our upcoming workshops.
You might also like to check our end of financial year checklist, explore our range of financial tools and templates to help you plan ahead or read our quick guide to tax deductions.
More information
For more tax-time tips, explore what you can do if you’re expecting a higher income next financial year or expert tax tips.
For tax advice or specific tax information, please speak to your accountant or check the ATO website for details.
