Business structure is critical to obtaining the best taxation benefits. Indeed this is a crucial factor if you’re planning to sell your business thus activating the important small business Capital Gains Tax (CGT) concession.
So proactive forward-planning is the golden rule to avoid common pitfalls like overstepping the $6M net asset value test. When you have a precise handle on your asset value you can off-set exceeding the $6m threshold by taking steps such as:
- Making a compliant higher superannuation contributions
- Investing in more assets that fall outside the CGT net asset value category
In recent years Trusts have won more favour with the Government and the ATO. Yet this does not translate to more lenient treatment of Trusts. It is crucial to maintain close attention to detail in all things Trust related right throughout the year. Examples include ensuring:
- Appropriate resolutions have been documented and filed
- Loan repayments have been made on due dates
- Interest payments have been paid by due dates
Stock is an important consideration for many businesses. Individual stock items can be valued by different valuation methods. Some pre-planning can result in a significant change of stock valuations. Remember, you don’t have to value all of your stock at cost.
Research and Development
When your business spends over $20,000 on Research and Development (R&D) activities within the year, you can take advantage of the R&D tax concession. Factor this into your R&D planning upfront. Discuss every R&D project with your accountant prior to embarking on the actual initiative. This way you can be sure that you launch your R&D project with all appropriate systems and record-keeping requirements in place. Complete comprehensive documentation is pivotal to tax planning and claiming for R&D. To take advantage of the R&D concession you will need to:
- Thoroughly record and cost all time spent on the R&D project
- Meticulously identify and record direct expenditure in your company financial records
Tax planning secures ongoing wealth creation while protecting your assets through impeccable tax compliance. Why not speak with Ganrid Consultants to road map your tax planning for the 2015/16 financial year.