Why Every Business Owner Needs a Tax Planning Meeting

Jason · 00:00Welcome to episode 234 of the Numbers Game. I'm Jace. I'm here with Nick and Marty. And guys, today I wanna talk about why it's critical for your business owners to do tax planning. Um, tax planning sounds boring. It's not that exciting. Doesn't sound sexy, but I'm hoping that by the end of this effort, uh, you guys will absolutely be in agreeance with me that tax planning's one of the most crucial things a business owner can do, um, to get you guys, uh.

Jason · 00:26Involved. When I say tax planning, what do you think of Marty?

Marty · 00:29Well, well I'm thinking, are you gonna save me money or make me money or do a bit of both? That's, that's where my head's going.

Jason · 00:35Yeah. Awesome. Awesome. Hopefully a bit of both. Uh, depends. Depends on what kind of year you had and then what your future plans are.

Jason · 00:40But yeah, no, good start. What about you, Nick? Uh,

Nick · 00:44I'm planning on planning the a TO minimal.

Jason · 00:47Oh, okay. Legally, the legal minimum amount of tax payable.

Nick · 00:51Well, it depends on your accountant, but if I came to future advisory, it'd be all above board. Yes.

Jason · 00:57Oh, God. Don't even get me started on that. Some of the

Jason · 01:00things that we see that come, you know, I love the accounting profession.

Jason · 01:02I do a lot of work with the CPA and Xero, but sometimes you come across something and go. This is just really not up to scratch and not the standard, uh, that should be out there. But anyway, um, I thought it'd be timely to drop this, you know, at the moment if anyone's catching this in, the more timely of when the episode comes out week to week, it's gonna be early June, 2025.

Jason · 01:25It's not giving you much time, but it's tax planning time. So if you haven't already met with your accountant, there's a whole list of things that business owners should do before 30 June. Now, if you're not doing it before 30 June, you're often giving yourself or opening yourself up to a bit of risk that the a TO come knocking and you didn't have the documents in place by 30 June.

Jason · 01:43There's risk if you haven't done your trust distribution resolutions by 30 june. There's risk, and I'm happy to kind of touch on a few of those points with you guys today to explain that, but ultimately, if accountant is worth their weight in gold, they would've offered you a meeting before 30 June. Or they've already got you set up in this

Jason · 02:00system of declaring dividends, doing your trust, distribution minutes, ta talking to you about bucket companies and family trusts and all those things.

Jason · 02:07But I kind of wanted to get into, especially off the back of 2025 as a financial year, um, has been a bit of a turbulent one, I'd say. Um, I think there's a lot of businesses doing it tough out there. So even though we're talking about tax minimization and not paying, uh, the right amount of, uh, you know, not paying too much tax.

Jason · 02:24There's also opportunities to get in a room and, and help business owners out when you talk about not just minimizing tax, but also the strategy of how their business is being ran moving forward. Um, I guess in, when you look at proactive relationship with your accountant, you don't wanna just be looking at historical numbers, planning for the past.

Jason · 02:43You wanna be using the numbers to plan for the future. Um, so I guess, you know, throwing it back to you guys again. Conversations with your accountants in the past, has it felt reactive or, or kind of looking at past numbers or, or is there a fair bit of forward planning as to what's coming ahead for your business?

Nick · 02:58Reactive for, for me

Nick · 03:00and my clients. Yeah. Yeah. Which is why it's super important to take responsibility yourself.

Marty · 03:05Yep. Yeah. I've been fortunate a few times. I say a few times where I've got a call in advance and uh, on something that's coming up that's actually. Quite good that I didn't know about. They're the calls I really appreciate.

Marty · 03:17Like I go when the can does that, it's like it's setting you up. For the next year. But it's not that common. It's not that common that you see that, uh, out there.

Jason · 03:27Yep. Awesome. Uh, it's a good point, Nick, and actually, I, I wanna circle back to that. You said you have to take responsibility now as a director of a company or the trust trustee of a family trust, or a combination of both.

Jason · 03:40The ultimate person responsible to make sure things are lodged on time, lodged correctly and done all by the due dates, is the director and the trustee of the trust. So it's all good and well that if your accountant's busy hasn't been able to be proactive, some businesses are doing it tough. I mean, we, we've recently just hired, I think five people in

Jason · 04:00the last five weeks because we need to increase our capacity to ensure that we can continue to serve the business owners that we work with and serve them well and provide value.

Jason · 04:09But I can imagine that not everybody has the lead gen of employees and, and the attractiveness of a model that future advisories built over the years. So there's probably some firms out there doing it tough. So why it's important to touch on taking responsibility is if you're, you're a business owner and you haven't heard from your accountant, it's also okay for you to pick up the phone.

Jason · 04:27Look for that service and, and try and book in and, and bring yourself back to the top of the list. It's also your responsibility if your, if your accountant can't take after you anymore, you've gotta go and find somebody else who will look after you. So, great point to make upfront, Nick. Now why this matters off the get go, I mean, I'm immersed in this information, but there's an example of a case the A TL are fighting at the moment called the Bendell case, and that's to do with how distributions were basically sent out to a bucket company and loaned out to members of the family.

Jason · 05:00There's trust reform over the years, things called Section 100 A and I, I'll try not to bore you with all the stuff, but it's important again, this taking responsibility that if your accountant talks to you about doing a family trust distribution to. Your partner, your kids, your mom or dad, but the money never moved hands.

Jason · 05:18You're at risk there that if the a TO comes back and audits you and has a look and says, well, hang on a minute, you declared 50 grand of income into so-and-so's name, and they paid less tax than what you would've, so that's tax avoidance. If it's not done properly. If you didn't move the money physically as part of the trust distribution, you could get yourself into some hot water that basically it's just a scheme to do tax avoidance rather than genuine tax planning for family tax minimization.

Marty · 05:43I think if, uh, there's no point, uh, having the strategy, if you're not gonna implement the logistics. In the strategy, you know, so it's, uh, I understand why they might be looking into that.

Jason · 05:55Beyond that, the a TL have also increased their reporting ability. So what happens is now when

Jason · 06:00an accountant lodges a family trust return, if I said through my family trust that I was declaring some income into my wife's name, so Casey's gonna get a family trust distribution.

Jason · 06:10The data matching will now register that on Casey's. Prefill report moving forward. So when Casey goes and does her tax return, if, if I didn't tell her that I was doing a tax, a trust distribution to her tax return, it's gonna pop up on her prefill report and automatically add to her tax return, which can then all of a sudden cause some awkward conversations if people aren't being fully transparent with their partners, siblings, parents, and or, or adult children.

Jason · 06:34So again, this communication upfront and pre 30 June is really important 'cause otherwise if you decide to do it, trustee signs off on it. Tax return gets lodged, but you never had the conversation with adult children or partners or, or family members when they go to do their tax. Next year it's gonna be on their prefill report and they're gonna be asking some questions, go, how did this get there?

Jason · 06:54Who was responsible? And, um, yeah, the, this, the first year this is gonna be happening that the

Jason · 07:00prefill report will include trust distributions from family trusts.

Nick · 07:03The other thing there too, Jason, is it could impact. Um, next year's POYG income. Where have you had a, I'm just thinking if you, if you distribute, distribute and someone gets a tax debt.

Nick · 07:15They would if you distributed generally. Mm-hmm. And they'll have a tax bill, then next year they'll possibly have to prepay their PAYG based on that last year's income.

Jason · 07:24Nick, it's almost like you, you know how to time these things beautifully. Possibly

Nick · 07:28being there, done

Jason · 07:28that and it flows into cash flow is king, is the next little part of this.

Jason · 07:33So when you're thinking about tax planning, one thing that clients love to know is what cash is mine? So you might be looking at your company bank account. There might be a hundred grand in there. But if you don't do tax planning and you get to November and I send you a $30,000 tax bill and a $50,000 bass for the June quarter due the 25th, oh, sorry, the September quarter due 25th of November, and all of a sudden you've got your

Jason · 08:00September bass, your June bass took a big chunk of cash, and you've got a $30,000 tax bill.

Jason · 08:05So all of a sudden that a hundred grand disappears, but you didn't know the tax bill was coming in advance. That's a pretty shocking way to. You know, operate a business without knowing what your cashflow is. So the best part about tax planning is also what you touched on, Nick, is an understanding of your future cashflow events.

Jason · 08:22What date the tax bills due, what's an estimate of how much I owe? And then if there are distributions moving around through family members, what are their tax installments going to be? So you've gotta be able to start to prepare for those in future, especially if you've had a bit of a turbulent year where you haven't been able to plan for that cashflow.

Jason · 08:40So you wanna avoid those last minute scrambles or, or the unnecessary stress of getting a bill in the mail that you weren't aware of? A lot of the conversations we're having, you know, in April, may, and June every year, is that transparency with a client to say, Hey, there's how much money your company made.

Jason · 08:55If we do nothing and you're happy to leave the money in your company, your tax

Jason · 09:00bill, let's call it $30,000, is due in May, 2026. So in May, 2025, you are being told a year in advance how much money is not your company's money and that you should be putting aside in your long-term tax savings or making sure it becomes not part of your working capital.

Jason · 09:19So ripping it out and sticking it in a high interest saver, um, as an example of how to manage that money effectively.

Marty · 09:24I I can't tell you how much, uh, tax debt I've seen over the last two or three years with businesses. Um, and, and one of the biggest destroyers of businesses is mismanagement and lack of understanding on cash flow, like a hundred percent.

Marty · 09:38That's, that's the main, main killer. So it's, uh, yeah, it's, it's really great advice because it's, it's, people need to hear it and understand it.

Nick · 09:48This is a question that I've had in the past. Um. If you, particularly with people that are the one or two person bands, um, where they haven't got. A big cost base.

Nick · 09:59So

Nick · 10:00most of what they're receiving is income for themselves. Mm-hmm. If they're putting tax away. You mentioned a high interest account. Mm-hmm. Uh, does it need to be in, if they're an entity, in the entity name? If they're an individual such as a sole trader that's registered for bas, can it then be in something like an mortgage offset account?

Jason · 10:19Yep. Yep. So if you're a sole trader, um, and your A B N's under your personal name, that money is effectively yours. So sitting it in your offset. Is the version of the high interest savings account. Um, so definitely same with the family Trust. Generally, if you are the beneficiary of the trust, that money is gonna be yours at the end of the year.

Jason · 10:35So if it's not sitting in the trust account and it sits in your offset account, that's a, that's a little bit easier if the money is gonna flow to you. 'cause when you think about a family trust, you have to distribute all the profits of the family trust before 30 June. Um, it has to be told who the beneficiaries are.

Jason · 10:49If you don't do that, the family trust tax rate's 47%. So if you, this is why getting those trust distributions done before 30 June is so crucial 'cause nobody wants to be hit with a

Jason · 11:0047% tax bill for not doing their job properly or not doing the distribution minutes.

Marty · 11:03Chase. A lot of business owners, rightly or wrongly, will take a loan out of the business across for personal use.

Marty · 11:11What are the ramifications of doing that? Um, compared to, 'cause technically they're seeing that as taking income that they've earned, right? Yeah. Without, without understanding the consequences. What's the balance of that compared to trust distributions and how do they differ just so people know?

Jason · 11:28So the difference with a, with a family trust, if you are the individual beneficiary and the money's gonna flow to you, that, that's becoming part of your drawings out of the trust, which becomes your taxable income at the end of the year.

Jason · 11:39The difference with a company is that. The company in its own legal entity, right? Even though it trust is its own entity too, but there's beneficiaries that will pay the tax as a company. If you are not formally distributing that money out, it's the company's money. If the director takes that money and parks it somewhere else, you may be sitting setting up what's called a division seven a loan.

Jason · 11:59That's

Jason · 12:00something the a TO frowns upon pretty, pretty, uh, pretty badly unless you set it up properly. So again, this whole idea of meeting your accountant before 30 June is to put the paperwork in place to keep you safe. If you did strip some money outta the company and use it somewhere else, you need to create a loan agreement for the amount you took.

Jason · 12:18Formal, structured repayments to say, okay, I did take a hundred grand, but I'm gonna pay back X per year. I know the interest rate, which is all dictated by the a TO. There's a specific interest rate you have to pay when you borrow money from your own company or take money from your own company. The flip side of that, again, is where people get it wrong.

Jason · 12:36If they don't meet the minimum repayment, that whole amount can be declared as a dividend, and then it becomes taxable income in the person's name, which is what it should have been anyway, because if they took the money with no intention of repaying it to the company, it should have been declared as income to that individual's personal tax return.

Jason · 12:53And then it's their money. They can do it, they want with it. They're gonna have to pay. The difference between the company tax rate and what are their

Jason · 13:00individual marginal tax rate is in that particular year, which you get, is why when you do tax planning, you balance it out to say, well, actually you've earned one 30.

Jason · 13:09You can earn up to one 90, and it's a pretty efficient tax rate to one 90 for the 2025 financial year. Let's declare a dividend and clean up that loan account so that you don't actually owe your company any money. Or the conversation goes, you've taken money outta the company. Big. No, no. Put it back in before 30 June to avoid getting yourself in any trouble or put it back in before lodgement date of your next tax return to get to avoid getting into any trouble.

Marty · 13:33So, so why? Why do people take her? Loan out instead of a distribution. Like why, why would that, I know we've talked about previously briefly, but

Jason · 13:42kicking the tax can down the road. So if you pull a hundred grand out and do it and, and say you're gonna repay it,

Marty · 13:47so you're not paying tax on it, that's the name of the game, is it?

Marty · 13:50Yeah. You're repaying it

Jason · 13:51back to the company and the company earns some interest and then pays tax on the interest as opposed to if I took the a hundred grand and my marginal tax rate was

Jason · 14:0045%, okay, I, I take the a hundred and then I've gotta send another $20,000 to the HO in my own name.

Marty · 14:05Yeah, I see where they're coming from Then because I, I see business owners do it.

Marty · 14:08I'm going, why would you do a loan? It, it just, yeah. Doesn't make sense to me. Well,

Jason · 14:11and it, it's, it really becomes poor management of their money over. It can, it can lead to poor management of money where you've got extra money in your account. You know, sometimes people see their company funds and their own money and there's a bit of a blend of merging them together and go, oh, I've got this much money in the bank.

Jason · 14:28But if that money gets spent personally, or you actually pay down your home loan and it's not a offset facility, for example, then you've gotta redraw against it. There's complications again of, of meddling with company money in your personal accounts. So again, something that needs to be really well managed in that relationship with your advisor or your accountant.

Nick · 14:47Jason wouldn't mind just going a little bit deeper on the whole offset thing and parking your tax and I, I, I think it's important 'cause everything that you guys just spoke about then, um, the thing that I was hearing was, well, you need to

Nick · 15:00get your structure right based on what you're trying to achieve in your business.

Nick · 15:04So should you be a family trust? Should you be an entity and. I think if you're not growing a big business, then family trust could be the way to go. At least that's where your distributions go. Yeah. I just did some quick calcs, and I think this is highly important for people to, to understand this, but hypothetically, if you parked away, if you had 50 grand sitting in a tax account, um, that was there for, for when and if the a TO needed money at some stage, depending on your business, perform, how your business performed, if you had that sitting in a high interest saver account.

Nick · 15:36At the moment with rates at where they are, that you're probably gonna get 4.5 to 5% in, um mm-hmm. Uh, from a return point of view. So if you had 50 grand in one of those accounts at 5%, then you're gonna get 25 grand in interest. Um, two and a half grand in interest for the year. That right? Yep. That's right.

Nick · 15:56Yep. Yep. So. Let's just pick numbers again.

Nick · 16:00If it's a 30% tax rate that you end up paying individually, which is probably standard for a lot of good business owners. Yep. Good. Average. Um, yep. You've made two and a half grand, so you're gonna lose 30% of that, which is, gets you down to what, 1700 or something like that net.

Nick · 16:16Does that sound about right? Mm-hmm. So if you had that money in offset account. Your home loan's probably at 6%. So your home loan's always gonna be somewhere between one to 1.5% beyond what you could get in a deposit account. That's just, that's just how it works. So effectively you've had that 50 grand sitting at your home loan.

Nick · 16:37Instead of earning 5% or two and a half K, you've saved three grand or 6% with no tax impact. 'cause it's a saving. So just having that. Money in the right account is possibly a $1,500 a year difference, and then it just compounds after that. Like some people might have 200 grand sitting in that account. So it's this,

Nick · 17:00I think it's significant thing to understand.

Nick · 17:02And it can actually come into tax planning as well. Where are you parking that money? You've just got it at, at least have it in a high interest labor, not just in your trading, in another trading account. Any of you can get it in an offset account if you have a mortgage debt, which most people do, let's be honest.

Nick · 17:18So.

Jason · 17:18This is again, that really important, um, understanding of your structures and whose money's, whose and where it can actually sit. Because the a, if the a TO saw a company pulling all the money out into an offset, then paying it back at the end of the year, it can be seen that the company missed out on particular earnings on that money.

Jason · 17:34It's been used personally by director, um, to gain a benefit. So there's just always like ways to be careful and ways to formalize. You know, anything that happens with money, um, family trust, sole trader, much simpler to be able to send that money over to an offset account or park it an offset compared to a company.

Jason · 17:50So there's just things to look out for. Um, guys based on, you know, a few of the other things just to, just to look over of what happens at tax planning before I

Jason · 18:00kind of give you a bit of a look at the agenda, um, growth and opportunity. So again, I talked about you don't want to just get into a meeting or look at your figures for the last year and go, okay, cool, I made this much money.

Jason · 18:11This is the tax io. Thanks for my trust distribution minutes. Thanks for my dividend statement. See you later. The conversation then needs to turn to, well, what are the future plans? It's all good, but since we're in a room together, since we've got this opportunity, what is happening in the next financial year?

Jason · 18:28What are your goals? What are you trying to achieve? Are you happy with the business, how it runs today? And sometimes it's pretty confronting conversations, but it actually gives that business owner an opportunity to look at. Nine, 10 or 11 months worth of work and say you project out. What we do as part of it is projecting it out.

Jason · 18:46So we'd go based on projections. This financial year, you're gonna have turned over this much and you're gonna keep this much profit. And your combined family taxable income is number. Are you happy? Do you feel like this is representative

Jason · 19:00of how hard you've worked or what you've built in your business?

Jason · 19:03Are you getting enough of a return? Sometimes the conversation is, yep, great year. I'm really happy. Love to just rinse and repeat and do it again. Other times you identify with business owners, like what we've talked about in a previous episode about burnout and stress and wearing too many hats, is they're actually not happy with their business and they need to look at, you know, how to restructure, how to minimize operations, how to increase things or, or, or change the way things are operating.

Jason · 19:28So it's a great opportunity to then lead into how we can work with our clients. The following year or how we might refer that to different referral partners who can, you know, dive deeper with our clients to uncover what's going wrong and what needs to happen moving forward.

Marty · 19:42I think, I think you bring up a critical point there, Jace, because so many, and I'm talking about business owners 'cause it's my genuine interest, but, um, have strategic planning.

Marty · 19:53They do future planning in regards to their business. Um, have everything in play for the next 12 months, three months,

Marty · 20:00however long. But they never decide what they want to do with their personal wealth side of things. And, and really put the same level of detail into that for their family as they do for the business.

Marty · 20:13And I think that's why that type of discussion and having a holistic discussion around not only the business side, but also personally I. Is paramount because again, no po no point making money in one area if you're burning it in another. So again, actually to formulate a, a personal plan with a business plan is, um, I, I, I think a critical component that gets missed a lot.

Nick · 20:36Yeah. Marty had a. A good conversation yesterday with a, um, a leader of a real estate sales team. And a lot of those agents were, um, were contractors, so trying to teach them on personal wealth. And one of the things that I said, the absolute first thing you should do, and this goes against, um, tax planning and, you know, minimizing tax.

Nick · 20:57Pay yourself a salary, work out

Nick · 21:00what you need to earn in your household to pay your mortgage, put food on the table. Um, and put some money away to invest. 'cause that means that money will come in every week or month. It means it'll have a super contribution attached to it. So your super will start building.

Nick · 21:15That's the mistake I made. Um, being a young business owner, didn't pay myself a big enough wage. Super fell behind and you're forced to pay tax ongoing. So you get rid of some of the burden of getting to the end of the year and having this big tax bill and it just creates a really good habit. Um, and at the same time, it helps tax planning.

Nick · 21:33I know we're sort of digressing a little bit here, but um, yeah, it just made me think of the conversation I had yesterday, um, around, you know, getting yourself paid. Robert Kiyosaki. Yep. Uh, rich Dad, poor Dad, pay yourself first, all that stuff.

Jason · 21:47Yep. Another one, Mike. Mike Malowitz, profit First. Um, talks about making sure that you as the business owner, get paid first.

Jason · 21:55And if you ca if your business can't even satisfy paying you first, why would you pay everyone else

Jason · 22:00to then end up with nothing? So it's just changed that mindset that, you know, you gotta create something that allows you to get paid first and can then afford everything else. So, yeah, definitely worth a look at both Rich Dad, port Dad, and, uh.

Jason · 22:11Profit first if you're new to us and haven't come across them before. Um, so moving on from growth and opportunity, just another couple, couple examples. There are people wanna do tax minimization a lot. They wanna lower their taxable income or don't wanna pay tax. We get over the end of the financial year and if we haven't had these growth conversations or what's next conversations, we get a letter from, oh, sorry.

Jason · 22:31We get an email or a call from the team at Innovate and they say, Hey Jace, what's the client's taxable income? They've just told us they wanna buy a house. It's like, great, cool. Now, now tax planning, uh, we that didn't come up or you know, or for some reason these clients declined tax planning and now all of a sudden their income is what it says on paper.

Jason · 22:51And there's a not an opportunity to really reshuffle things to show how the year actually unfolded. But these are the conversations. You know, you might be wanting to buy a house, you

Jason · 23:00might be wanting to put a shit load of money into super to set up a self-managed super fund and buy some commercial property.

Jason · 23:05Um, there might be other investment opportunities that you're looking into, but. Until you have the opportunity to look at what's happening next year, what am I trying to achieve? What's the growth of the business as well? You know, do you need to purchase a particular piece of machinery or asset or turnover?

Jason · 23:20Some new cars, they're all things that need to be taken into account that when you send that financials and tax returns to a broker, if things are done a certain way, it helps to, you know, get the money unlocked to show the business is performing a certain way. It's

Nick · 23:34so important, mate. And we obviously

Marty · 23:36see it

Nick · 23:36preaching

Marty · 23:37to the converters there.

Marty · 23:37I I'm thinking every, every mortgage broker across Australia is going, I need a bit of relationship with my accountant. And there it is. It's like, you know, work out where, where your client wants to go and where they need to go personally. Have a chat to an accountant. 'cause, uh. Preferably Jace.

Jason · 23:53Yeah, no, no.

Jason · 23:54All good. And guys, look, I mean, yeah, won't try to bore you too much, and I hope you can see how important tax planning is and the

Jason · 24:00excitement of it all that I have and my team have, um, we, we probably run about 300 meetings over three months at this time of year. Just really, it's, it's our opportunity to get in front of our clients.

Jason · 24:09We love it. Um. I mean, I haven't even scratched the surface, some of the things that come out of it, but I'll take you through just at a high level, the agenda of the meeting and then we can kind of, uh, have any closing comments. But effectively we get in with our clients and we wouldn't be numbers people without looking at the numbers first.

Jason · 24:25So, um, apart from the check-in that we do with our clients, they all fill out a survey, which allows us to. Conveniently capture information, which asks them these questions about what are their plans for next year? Do they want to invest in anything? Do they need new equipment? So we get all that off the way pre-meeting.

Jason · 24:40Once we dive in, we're looking at the profit and loss. We're looking at the balance sheet. We're asking the clients if they're comfortable and aware with the numbers we're showing, does it all make sense to 'em? 'cause a lot of the times business owners don't spend a lot of time looking at their own profit loss and balance sheet.

Jason · 24:53So it's a really good opportunity just to reset and say, guys. Here's your PL and balance sheet. Do you understand it all? And if

Jason · 25:00not, it's an education opportunity. Just do that 1 0 1 how it's all connected. And, and sometimes you can see the, the, the cogs click and a client goes, oh, is that how that works?

Jason · 25:08Like, thank, thank you for showing me that. And 'cause you don't know what you don't know. And, and we want these to feel educational and not like you're an idiot if you didn't know something. So it's all about making it comfortable. After that, we forecast the rest of the year and we tell you what your estimated tax payable would be if we did nothing.

Jason · 25:25I. Just said, this is your year. There's your tax bill done. Obviously, then that rolls into the conversation of that's what happens and you don't want any nasty surprises. So we, we preempt cash flow issues. We look at page installments, um, page go installments. Then we say tax minimization strategy. So there's heaps of different things, but the big ones are around prepaying expenses, bringing forward deductions that are genuine, pushing back some income that you don't need to bring into this financial year.

Jason · 25:52If there's a timing difference of income hitting in June versus income hitting in July. As an example, if you took a hundred grand

Jason · 26:00in June, you'd owe $25,000 sooner, like so that'd be due by May, 2026 if you're able to defer that income. By a week, and it lands in the first week of July, depending if you're accruals versus cash.

Jason · 26:12But then all of a sudden on that a hundred grand profit, if it's coal profit, that $25,000 tax isn't due until May, 2027. All of a sudden you've got some extra cash.

Nick · 26:23So just a question on that. Um, so that would be for people who raise or have the ability to raise invoices, are you just saying just push, push your invoice back a week?

Nick · 26:32Don't invo invoice the client yet. It's as simple as that. It

Jason · 26:35depends on cash versus accruals. So if you're on an ac, if you're on a cash basis, you could still raise the invoice and have a conversation with your client and say, look, uh, it's my preference that if you don't need to get that money outta your account, can you make sure you pay that invoice on the 7th of July you'd set the due date for next year.

Nick · 26:52The assumption there would be people probably want to pay you on the flip side Correct. Prior to June 30 to get their own tax down.

Jason · 26:59And it is that juggle

Jason · 27:00game, um, of, of cash versus accruals and having a relationship with your customers and, and some of your suppliers to be able to juggle some of that.

Jason · 27:07Um. Writing off bad debts, obsolete stock, so stock on hand And stock movements are obviously a, sometimes a really big driver of what happens on your profit loss and how much tax you pay if you are carrying obsolete stock. But it's sitting in your inventory balance. Let's say there's a hundred grand of stock that could be written off by actually moving that through the profit loss and writing down your stock balance.

Jason · 27:28You've just saved $25,000 in tax. And that's at company tax rate, let alone, you know, in, in a trust or a sole trader. So again, if you're not doing these things before 30 June and not having these conversations with your accountant, I just gave a couple of really small examples, but you can think about how, what quantity of tax you can save if you were to pull all the levers available.

Jason · 27:49Then we roll into super contributions as accountants. We say what the tax saving of the super contribution is and what's their available amount. We don't advise from a financial point of view of what

Jason · 28:00should or shouldn't be done. That's where we hand over to the lovely team at, uh, innovate, uh, who will talk to our clients about their financial planning and what they can do.

Jason · 28:08But again, the example there. If you've got a, you know, carry forward cap, and we've seen this used and you've got some cash, we've seen clients that are in the top marginal bracket decide to utilize their cap. And let's say hypothetically they put in $50,000 of additional super. They're in the top marginal bracket that's just saved them 22 and $5,000 in tax in their personal name to make a tax deductible contribution to super before 30 June.

Jason · 28:37Um, so again, super contributions is one of the big ones. You'll always, if you do tax planning, it's probably the the main big lever that accountants will try and pull to say, Hey, Chuck some money in Super. We'll get you a big tax saving. But again, it all comes down to personal situation. If you are trying to build a deposit for a house, if you are trying to knock down, you know, you wanna put some money in the offset to not pay too much, uh, interest on your house, these things have an

Jason · 29:00impact on how much money people wanna then take outta their personal savings and put into their super as a contribution.

Jason · 29:06But it is often finding that balance of what makes sense to put into super, because I'm worried about, or I'm conscious of building wealth for my retirement versus. You know, I, I, I don't really wanna pay that much into super, but I do wanna save some tax. So, last couple of points, really quick, touch on trust distribution resolutions.

Jason · 29:24Need to be done and signed before 30 June. Division seven A Loans and loan management. If you have taken money from a company, need to put formal agreements in place. We'll review your asset purchases, look at depreciation. Tax losses and offsets structure. Are you a company or a trust? Are you a sole trader?

Jason · 29:41We review that and look at how we can restructure it and we wrap up with general business and strategy chat. You know, plans for growth and expansion. How are your staff going? What are your pricing and margins? Any tech improvements? How's your AI plan? All those things. So guys, I think I've, uh. It's given you a whole lot of what we do for tax planning, but yeah, I'd love

Jason · 30:00to throw it to you guys.

Jason · 30:00If there is anything, uh, that jumped out at you or anything that crosses your mind,

Marty · 30:03jumped out. I just go, like, people always complain about paying fees, but I'm going, I just listened for about 10, 15 minutes on the value that is provided with the right accountant and, um, it's astronomical. It's the same in financial planning.

Marty · 30:19It's the same in mortgage broking. It's, uh, you don't know what you don't know. That can cost you so much if you're not getting the right advice. But even there, it's absolute minefield, but you work through it beautifully. And, uh, I think every business owner's ready to, you know, just pick up the phone.

Marty · 30:36It's, uh, incredible stuff. Well done. Appreciate

Nick · 30:39that mate. Dan, for me, I, I know we're talking about money and reducing tax and or at least minimizing tax where we can and legally, um, but for me, I think the biggest value add is just peace of mind and I think as a. Business owner, when you get tax bills or you have cashflow issues, it

Nick · 31:00completely derails, um, your focus and, um, realistically in the end, your performance.

Nick · 31:06So for me, it's peace of mind knowing that you're doing everything right. You're not gonna get a tax bill that you don't have the money to deal with, and then you can channel your energy into where you need to channel it, which is how to grow your business. Yeah. So I think the, um. Maybe the, the peace of mind, which is hard to quantify, but that's the biggest, that's the biggest takeaway.

Nick · 31:27It's massive, Nick.

Marty · 31:27Like how many times like you, you, you're burning money in places you didn't expect in business. And a lot of that's around that type of lack of advice. And it's, um, to get the right advice and no, you've got the stepping stones to build a better future is, uh, is incredible. So, uh, every business owner's been there, but again, don't balk it.

Marty · 31:48Don't balk at a fee when you're getting so much more value. Probably 30, 40 times over. It's incredible.

Jason · 31:54I appreciate that and sometimes, you know, accountants across the country in Australia aren't sometimes good at describing the value that

Jason · 32:00they're bringing and how much work goes on in the background.

Jason · 32:02So yeah, hopefully this helps to explain to business owners that tax planning isn't a nice to have, it's a must have before 30 June. And uh, I really love what you said earlier on, Nick, you, if you're the business owner and you're not getting this, you need to drive this yourself. Like, take some responsibility, be productive, and get it booked in yourself now, or find someone who does wanna be productive for your business.

Jason · 32:21So thank you for joining us. Uh, like, follow, subscribe, click all the buttons, but until next time.

Marty · 32:27Numbers tell a story, but when Jace does it, it's really sexy. Game over.

Jason · 32:34This podcast is for educational and informational purposes only. The conversations are of general nature and do not qualify as financial or tax advice.

Jason · 32:42We recommend before you make any financial decisions, you consult a licensed professional. Individuals on the podcast may hold positions in the companies discussed. ---