Change of season a time for changes in your business?

Mar 19, 2024

As the seasons change (can you believe we’re in Autumn already?), it’s a perfect time to review your tax planning and accounting needs. Many people tend to overlook their tax and business structure until the last minute, but taking a proactive approach now can lead to significant benefits later in the year and beyond.

First and foremost, regular reviews of your tax planning and accounting practices are essential for maintaining a strong financial foundation. Just as a building needs a solid foundation to withstand the test of time, your financial future relies on sound tax and accounting advice. By continually reviewing your accounts, you can identify any issues early on and take corrective action before they escalate.

One of the key benefits of a regular review is the potential for significant tax savings. By identifying and implementing tax-saving strategies, you can reduce your tax liability and keep more of your hard-earned money.

For example, there could be distribution strategies to minimise your tax burden, dividend strategies to maximise your after-tax income, optimising your business structure and peace of mind estate strategies with your business and SMSF.

TIP – research shows plans and targets get results!

With Autumn underway, an area you should keep a close eye on right now is Fringe Benefit Tax (FBT). The end-of-year for FBT is 31 March, not 30 June, with lodgements due by the end of May. So, if this employment benefits tax affects your business, it’s time to make it front of mind.

If not managed properly, FBT can quickly become a tax donation to the ATO, and the three key areas to watch are motor vehicles, housing benefits and entertainment.

If you need a refresher, FBT is a tax employers pay on certain benefits they provide to their employees or their employees’ associates in place of salary or wages.

When it comes to motor vehicles, the type of vehicle and its private use will impact your FBT.

TIP – If you have a car in a business make sure you keep a logbook! 

To reduce it, consider providing vehicles that are primarily used for work purposes, limiting private use, or using the operating cost method to calculate FBT. You could also consider structuring novated leases, which can provide tax benefits for both employers and employees or review any salary packaging options.

Housing benefits, such as providing accommodation to employees, can also attract FBT. Consider providing accommodation that is necessary for the employee’s job or providing housing for a short-term period. Ensuring that the accommodation is provided at market rates can also reduce FBT liability.

Entertainment expenses, including meals, entertainment, and recreation, can also be subject to FBT. Consider holding functions on your business premises, providing food and drink during work hours, or limiting the amount spent on entertainment per employee per year.

TIP – separate alcohol costs on any receipts and never travel without a travel diary!

Structuring fringe benefits requires careful consideration to minimise any FBT liability, but you need to be able to understand the FBT rules and implement strategies to reduce any tax. This can help you provide attractive benefits to your employees while managing their tax obligations.

CJ Baker & Associates play a crucial role in this process, serving as your trusted advisor when it comes to accounting, tax and advisory. From tax planning to business structure advice and specifics such as FBT, we can offer tailored solutions to help you maximise your tax savings and achieve your financial goals.