For many business owners, the focus naturally leans toward boosting profits. While that’s crucial, managing your tax liability is just as important—because every dollar you pay in tax directly affects your cash flow. The challenge? Australia’s tax laws are increasingly complex, and navigating them often requires expert advice.
Tax planning shouldn’t be an afterthought or a once-a-year checklist item. It should be a proactive, ongoing process that takes into account legislative changes, your business structure and financial goals, and the broader strategy driving your growth.
So, what does best-practice tax planning look like? And how can small to medium enterprise (SME) owners work closely with advisers to build effective, forward-looking strategies that go beyond compliance?
The Benefits of Proactive Tax Planning
- Staying Ahead of Legislative Changes
Australian tax law evolves rapidly. In recent years, we’ve seen everything from revised trust legislation to tighter regulations on deductions and digital reporting. Proactive tax planning helps you stay compliant and adapt early—before changes impact your bottom line.
Key takeaway: Regular reviews of your structure and tax position keep you ahead of the curve and in control.
- Cash Flow Management
Effective tax planning provides accurate forecasting of liabilities, so you’re not left scrambling. It allows you to prepare for payments (like PAYG instalments or GST) and keeps your cash flow healthy—helping reduce stress and enabling better decision-making.
Tip: Cloud platforms like Xero simplify much of this process. If you’re not using one, it’s worth exploring.
- Unlocking Growth Opportunities
Tax planning isn’t just defensive—it’s strategic. By identifying and accessing available concessions, timing purchases, or leveraging R&D incentives, you can free up capital and reinvest in scaling your business.
- Succession Planning, Exits & Asset Protection
If selling, retiring, or passing on your business is part of the plan, early tax planning is critical. It allows you to access capital gains concessions, reduce liabilities, and ensure assets are protected.
Takeaway: Your exit strategy should include a comprehensive tax strategy—don’t leave it too late.
- Sustainability & ESG Alignment
With ESG reporting growing in prominence, tax intersects with sustainability via carbon taxes, green investment incentives, and aligned grants. By integrating ESG with tax planning, you’re not just compliant—you’re building a future-focused brand.
What Happens in a Tax Planning Session?
You’ve got the “why”—now here’s the “what”:
- Review of Year-to-Date Financials
- Profit & loss statements
- Comparison with previous years and budget
- Analysis of spikes, one-offs, and timing issues
- Estimate Tax Payable
- Forecasting income
- Estimating tax across all entities (company, trust, personal)
- Including PAYG instalments already paid
- Implement Tax Minimisation Strategies
- Prepay expenses (subscriptions, rent, etc.)
- Accelerate deductions (equipment, training)
- Delay income if viable
- Write off bad debts or obsolete stock
- Super Contributions
- Maximise contributions before 30 June
- Discuss carry-forward unused caps
- Consider paying bonuses into super
- Trust Distribution Resolutions
- Plan beneficiary distributions
- Prepare trust minutes by 30 June
- Consider streaming capital gains or franked dividends
- Division 7A Loan Management
- Review director/shareholder loans
- Ensure agreements are in place
- Make repayments or declare dividends if needed
- Asset Purchases & Depreciation
- Leverage instant asset write-off thresholds
- Time equipment purchases strategically
- Review depreciation methods
- Utilise Tax Losses & Offsets
- Apply carry-forward losses where possible
- Plan around offsets or R&D incentives
- Structure & Risk Review
- Assess if your entity structure still suits your business
- Evaluate asset protection and succession needs
- General Business Strategy
- Discuss goals, growth plans, staffing
- Review pricing, margins, and operational improvements
- Explore tech upgrades or AI tools
Conclusion
Tax planning is more than compliance—it’s a vital strategy for growth, cash flow, risk management, and long-term success. With laws constantly shifting and opportunities often hidden in the fine print, proactive planning puts you in control. Whether you’re scaling up, exiting, or simply aiming for more efficiency, now is the time to treat tax planning as an essential part of your business strategy—not a once-a-year obligation.
FAQs
- When should I start tax planning?
Ideally, tax planning should be a year-round process, with a focused session in the final quarter of the financial year. Regular reviews throughout the year can help adapt to changes early.
- Can tax planning really improve cash flow?
Absolutely. By forecasting tax liabilities and taking advantage of timing strategies, you can better manage outflows and reduce unexpected financial pressure.
- What’s the difference between tax planning and tax compliance?
Tax compliance is about meeting your obligations (e.g., lodging returns on time). Tax planning is about proactively managing your affairs to legally reduce your tax bill and optimise outcomes.
- Do I need an accountant for tax planning?
Yes. A qualified tax adviser or accountant ensures you stay compliant while taking advantage of deductions, offsets, and structures tailored to your specific business.
- Is tax planning only for big businesses?
Not at all. Small and medium enterprises often benefit the most from tax planning, especially when cash flow and growth opportunities are critical.
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The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.
Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.
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