Tax time countdown: Seven keys to a better tax outcome

June 30 will be here before you know it. So it’s time to get serious about your tax planning.

But don’t get caught up in the hype. Test your ideas against these three tax planning rules:

1. Stay within the law but don’t pay any more tax than you need to.
2. Pay your tax at the lowest possible tax rate.
3. Don’t pay your tax before you need to.

These rules mean that you maximise your deductions, defer the taxing points where practical and ensure that income falls with the person or entity where the tax rate will be at its lowest.

To add to my first seven tax tips in my last blog, here are another seven to make tax time less painful.

1. Manage any loans to shareholders

If you operate through a company structure and the company has advanced you money during the year, or paid expenses on your behalf, then work out whether you are going to repay the loans or put in place a complying loan arrangement.

If you already have loan agreements in place from prior years, make sure that you make the minimum repayment and interest payment before June 30.

2. Document dividends

If you operate through a company and are going to pay dividends in this financial year, make sure that the appropriate resolutions are made and documented.

Check whether you need to pay the dividend before June 30. If you wait until July 1 you will defer any additional tax for another year.

3. Don’t buy small assets before June 30

From July 1 assets that you purchase up to $6,500 will be fully deductible. For this year, the maximum value for immediate write off is $1,000.

So if you can wait a few more weeks to buy those assets, you will achieve a much better tax outcome.