Reading this may save you tax and save you a lot of stress as a business owner.
Between now and 30 June 2021, there are certain areas that we know you need our assistance with, and we want to raise these now so you can plan for them to occur in a specific order.
To make it easier, we have combined all the key actions into our "2021 Year End Game Plan" approach outlined below.
REDUCING YOUR TAX + PLANNING FOR YOUR TAX PAYMENTS
Here is the order of the key tax planning services we recommend for you over the coming months:
In May and June 2021, we can provide you with a Tax Planning Report that will give you specific actions to reduce your tax, including the best way to spread business profits across family members to keep your overall group tax rate as low as legally possible.
We'll update this, if necessary, with anything new from the 2021 Federal Budget.
Based on our Tax Planning Report, we can then prepare your 2021 Trust Distribution Resolution for any Discretionary Trusts or Family Trusts that you have. You need to sign these before 30 June 2021 or the ATO may tax your Trust at the highest rate of 47% on any trust profits.
In July 2021 we will prepare a TaxFlow Plan for you. The important report will outline your next 18 months of tax payments for all individuals and entities in your group – summarised in a cashflow format with totals. This makes it so much easier for you to plan for your tax payments, and discuss with us your options for reducing any PAYG instalments that the ATO may automatically assess for you.
FBT – REDUCE ATO AUDIT PERIOD + FINALISING YOUR 2021 STP INFORMATION
Here is the order of the key Fringe Benefits Tax (FBT) services we recommend for you over the coming months:
In May 2021 we strongly recommend that we prepare 2021 FBT Return (including employee declarations) and lodge a 2021 FBT Return for you, even if it has NIL FBT payable. This restricts the ATO to a 3 year FBT audit period – otherwise the ATO can go back an unlimited number of years to audit your business for FBT. Nothing like having peace of mind!
Prior to 14 July 2021, you will be able to use the "reportable benefit" summary information included in our 2021 FBT Report to include for each employee in your Single Touch Payroll (STP) year end finalisation declaration. This information is required by the ATO so that it can be included in your employee's year end Income Statements.
2021 Tax Planning Report
Our advice will help you to:
Reduce your tax payable
Work out the best way to distribute business profits to your family
Have the information needed to prepare your Trust Distribution Resolutions
Understand what your next 18 month's tax payments are and when they are due
Lodgement of 2021 Fringe Benefits Tax Return
If we prepare and lodge your 2021 FBT Return, then the length of time the ATO can audit you for FBT purposes is limited to just 3 years. By limiting this potential ATO audit period to just 3 years, the risk to your business of having to pay large amount of FBT and penalties in the future is vastly reduced. If anything in this update is urgent for you, please feel free to contact Collins Hume in Ballina or Byron Bay immediately for assistance.