Accounting Consultant

Proactive tax planning maps your likely profit, tax and timing across the full year so you can make decisions early, not under pressure. Start with a rolling forecast that updates quarterly. Layer in your likely deductions, asset purchases, payroll, super, GST and any grants or offsets. If your business and investment income meets the entry rules for pay as you go (PAYG) instalments, plan those prepayments so you are not hit with a large bill at year end. Review your instalment settings each quarter. If profits are trending down, consider a downward variation to protect cash.

If profits are climbing, increase instalments to avoid interest later. Tie your planning to BAS lodgement dates and super due dates so cash is set aside before it is needed. Good planning also spots genuine opportunities in time to act. Examples include prepayments that fall within the 12-month rule, choosing the right depreciation method for new equipment, and making personal or employer super contributions before year end if appropriate. Build a short year-end checklist that covers distributions, bonuses, asset write-offs and bad debt reviews, then bring that forward to May so you have time to fund decisions.

The result is smoother cash flow, fewer surprises and cleaner books that flow straight into your tax return. The bonus is better management reporting every month, because the same processes that support tax planning also produce decision-ready numbers for pricing, hiring and investment.

Quarterly BAS due dates are 28 October, 28 February, 28 April and 28 July. Those dates cover GST, PAYG withholding, and often PAYG instalments. If a due date falls on a weekend or public holiday, the next business day applies. Some agents receive brief extensions, but you should still plan cash to the standard dates and treat any extension as a buffer. Monthly reporters generally lodge and pay by the 21st of the following month.

Annual GST reporters lodge once a year, usually by 31 October, or by 28 February if you are not required to lodge a tax return. Use a calendar that shows every statutory date for the year and block out transfer times so funds land in time. Align your debtor process to those dates. For example, aim to collect a larger share of receivables by the 20th of BAS months so you are not funding tax from overdraft. Build a three-line cash plan for the week before each due date that shows expected receipts, payroll and statutory payments.

If your business is seasonal, consider varying PAYG instalments so payments match reality. Keep proof of payment and lodgement receipts with your BAS workpapers, because tidy documentation cuts down follow-up queries and speeds up year-end work. Treat BAS months as a mini close. Reconcile bank accounts, review GST coding, and lock the month before you lodge. That habit keeps GST correct and improves accuracy for your management reports.

PAYG instalments are prepayments of income tax during the year. Most businesses pay quarterly through their activity statements. The amount can be calculated as a fixed dollar sum based on your last tax return, or as a percentage of current income. The fixed amount is simple but can become inaccurate when profits change. The percentage method tracks current trading but needs reliable bookkeeping and consistent coding.

You should consider a variation when your expected tax for the year is materially different from the default settings. Common reasons include a significant change in turnover or margins, a planned asset purchase that increases deductions, a business restructure, or a one-off event such as the sale of an asset. To vary, use the instalment section of your BAS or instalment notice, select the variation option and enter the revised amount or rate. Keep workings that show how you estimated your annual profit and tax. Review again next quarter and adjust if required. Be conservative.

Underpaying can lead to interest charges at year end, while modest overpayments simply create a credit that is applied against your final assessment. Link your PAYG settings to your rolling forecast so cash is set aside throughout the quarter. If you are new to business and expect to make a profit, voluntary entry can smooth your first year. If you expect a loss or a break-even result, consider whether a downward variation is appropriate. Speak to your adviser early so you can lodge the variation before the due date.

You must keep records that explain every transaction relevant to your tax, super and registrations. At a minimum, each record should show the date, amount, a clear description of the transaction, GST details where relevant, the purpose, and the relationship between the parties if that matters.

Follow five simple rules. First, keep everything that is relevant to starting, running, changing or closing your business. Second, protect records from alteration or loss and be able to reconstruct data if your system changes. Third, retain most records for five years from the later of the date you prepared the record or when the transaction was completed. Some records have a different retention start point, such as fringe benefits tax and employee super records. Fourth, be able to produce records if asked, including encryption keys or passwords if you store data digitally. Fifth, keep records in English or in a form that can be easily converted to English.

Practical tips help. Use cloud accounting to capture source documents with each transaction. Set a month-end checklist that reconciles bank accounts, payroll, GST and key balance sheet items. For vehicles and home-based expenses, keep logbooks and apportionment workings. Companies should also meet ASIC record rules, which are generally seven years. Good record-keeping reduces penalties, speeds up lodgements, and gives you reliable management information. It also lowers your year-end accounting bill because your adviser spends less time fixing errors and more time advising on strategy.

Most ordinary business costs are deductible if they are incurred in gaining or producing assessable income and are not private in nature. Common examples include wages, rent, utilities, insurance, professional fees, advertising, software, merchant fees and interest on business loans. Travel costs for business are generally deductible. For overnight trips, keep evidence of transport, accommodation and meals, and be mindful of fringe benefits tax if you are paying for employee travel. Home-based businesses can deduct a reasonable share of occupancy and running costs. Keep calculations that show the method used.

For capital items, the deduction timing depends on the asset and the rules in force for the year. The instant asset write-off allows eligible small businesses to claim an immediate deduction for the business portion of the cost of eligible new or second-hand depreciating assets up to the relevant threshold for the period when the asset is first used or installed ready for use. Thresholds and eligibility criteria have changed over recent years, so confirm the current settings before purchase. For assets that do not qualify for an immediate deduction, use simplified depreciation or general effective life rules as appropriate. Prepaid expenses that give you services within 12 months may be deductible upfront under the 12-month rule. Keep tax invoices and contracts for all claims.

Finally, separate private from business costs. If an expense has a mixed purpose, claim only the business portion and keep evidence of how you worked it out.

Accordion ContentYou must register for GST when your GST turnover is $75,000 or more. Non-profit bodies must register at $150,000 or more. You also must register if you provide taxi, limousine or ride-sourcing services, or if you want to claim fuel tax credits, regardless of turnover. If you are starting a business and expect to reach the threshold in your first year, register at the start rather than waiting. You have 21 days to register once you exceed the threshold.

GST turnover is your total business income excluding GST. When working out whether you meet the threshold, use either current GST turnover, which is the current month plus the previous 11 months, or projected GST turnover, which is the current month plus the next 11 months. Exclude input-taxed sales, private sales not connected with your enterprise, and supplies not connected with Australia. Registration below the threshold is optional. Voluntary registration can be sensible if your customers are mostly GST-registered businesses that can claim credits and if you want to claim GST on your own purchases.

Once registered, you must charge GST on taxable supplies, issue valid tax invoices, lodge BAS on your assigned cycle, and keep proper GST records. If you register voluntarily, you generally need to stay registered for at least 12 months. Review your status regularly as your business grows. Correct registration and timely lodgement help you avoid penalties and interest and keep your cash flow predictable.

For the 2024–25 year, the superannuation guarantee rate is 11.5 percent of ordinary time earnings for eligible employees. The rate increases to 12 percent from 1 July 2025. Super contributions are due quarterly by 28 January, 28 April, 28 July and 28 October. Paying late can trigger the super guarantee charge, which is costly and not tax deductible, so plan payments well before the due dates and allow for fund processing times. Use SuperStream-compliant methods to ensure contributions are received and allocated correctly.

Employers must also withhold PAYG tax from wages and remit it with their activity statements. Single Touch Payroll requires employers to report payroll information each pay cycle. At year end, you must finalise STP data so employees can lodge their tax returns. For the 2024–25 year the finalisation due date is 14 July 2025, although closely held payees may have a later date. Best practice is to reconcile payroll each month, check super accruals against payments, and clear payroll clearing accounts before lodging your BAS.

At year end, reconcile wages to the general ledger, confirm fringe benefits reporting, verify employee details, and then complete STP finalisation. Keeping payroll accurate reduces audit risk, avoids penalties, and builds trust with your team, because payments arrive on time and income statements are marked as tax ready when expected.

Trusts, companies and individuals are taxed differently, so planning needs to start early. Discretionary trust income usually needs a valid trustee resolution before 30 June to allocate net income to beneficiaries. Beneficiaries are taxed on their share of trust income, even if cash is not physically paid to them, so your plan should align tax outcomes with cash distributions and loan accounts.

In companies, dividends must be declared from profits and documented with dividend statements. The level of franking depends on your company tax rate and franking account balance. If you are a base-rate entity, franking credits typically reflect the 25 percent rate rather than 30 percent. Director remuneration paid as salary or fees must be reasonable, processed through payroll and reported for PAYG and super. Avoid drawings or loans that are not properly documented, as these can create Division 7A issues.

A practical process is to model three scenarios in May. Option one focuses on salary or bonuses to use available deductions and super caps. Option two balances franked dividends with cash needs. Option three spreads trust distributions among beneficiaries with lower marginal rates where appropriate. In each case, check cash, bank covenants, instalment settings and any personal tax considerations. Lock decisions in writing before 30 June, fund them on time, and keep all supporting calculations and minutes. Aligning profit, tax and cash avoids rushed choices in July and keeps your year-end smooth.

Two headline company tax rates apply in 2024–25. Base-rate entities pay 25 percent. These are companies with aggregated turnover under $50 million, provided no more than 80 percent of assessable income is from passive sources such as interest, rent and net capital gains. All other companies pay 30 percent.

This rate affects more than just your final tax bill. It also sets the franking credit rate for dividends you pay. If you are taxed at 25 percent, dividends you frank will generally carry franking credits at 25 percent. If you are taxed at 30 percent, the franking credit rate is typically 30 percent. Your rate also informs PAYG instalment planning. If you shift from base-rate entity to full rate, you may need to lift instalments to avoid an underpayment at year end.

Review your status each year. A growing business can cross the turnover threshold, and a change in income mix can push you over the 80 percent passive income test. Keep an eye on associated entities when assessing aggregated turnover. Build the current rate into your pricing decisions, dividend policy and year-end cash plan. If you are unsure about your status, have your accountant review your numbers before you declare dividends or set instalments, because the wrong rate can create franking account deficits or unexpected top-ups.

Legitimate tax planning is about arranging your affairs within the law to pay no more tax than necessary. It uses structures, concessions and timing choices that Parliament intended. Examples include choosing a suitable business structure, claiming genuine deductions with proper records, managing the timing of income and expenses with a commercial purpose, and using available depreciation rules.

Tax avoidance and evasion cross the line. Warning signs include promises of tax benefits that seem too good to be true, secrecy or pressure to act quickly, fees calculated on tax saved, moving income to lower-tax entities without a genuine commercial reason, inflating or inventing deductions, and schemes that disguise the true nature of transactions. The consequences can be severe, including denial of benefits, penalties and interest.

To stay on the right side, ensure every arrangement has a real business purpose and is documented clearly. Keep robust records that explain what you did and why. Sense-check the outcomes. If an arrangement produces a large tax saving with little or no commercial substance, step back and seek independent advice. For complex transactions, obtain professional advice in advance and keep written advice on file. A simple rule of thumb helps. If you would be comfortable explaining the arrangement openly and the numbers add up commercially, you are more likely to be within the intent of the law.