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Tax Minimisation for Businesses
Step 1. Structuring
- Entity Structuring to Save Tax
- Top-Hatting
- Trusts
- Companies
- Partnerships
- SMSF
Using the right combination of trusts, companies, partnerships and/or self-managed superfunds may save hundreds of thousands of dollars in tax over the long-term.
Read Key Points & Transcript
Structuring to Save Tax
video key points
- Entity choice is crucial for tax implications and wealth protection, often steering away from sole trader and partnership structures due to their tax inefficiencies.
- Companies, taxed at a flat rate, offer benefits but may incur “top-up” tax, mitigated by strategic shareholder structuring, such as incorporating family trusts.
- Family trusts, lauded for their tax flexibility, are commonly recommended for family businesses to optimise tax mitigation year after year.
- Alternatives like unit trusts and hybrid trusts cater to businesses with owners from different families.
- It’s essential to select and periodically review business structures to ensure continued tax effectiveness, with professional guidance recommended for optimising tax positions.
Presented by: Tanya Kamonphuangphan
video transcript
The entities you use in your structure will play a critical role in how you are taxed, and how much you are taxed.
A sole trader will be taxed at whatever their marginal tax rates are. They also have to contend with specific business loss rules. Together with wealth protection reasons, we seldom recommend a sole trader structure.
The partners of a partnership will also be taxed at their marginal tax rates. There is some limited flexibility to save tax, such as using uneven partner salaries. For many situations, it is advisable to avoid a partnership structure.
A company will be taxed at its relevant flat tax rate, which is typically less than the individual tax rates. However, when the company pays a dividend, this may lead to “top-up” tax.
Your earlier choices around structuring may alleviate or mitigate the top-up tax; such as whether the shareholders are individuals or a family trust. For this reason, plus other criteria, we usually recommend a company with family trust shareholders.
Throughout Australia, family trusts are a very popular vehicle for tax purposes. They don’t pay tax, but rather the beneficiaries do. The structure provides fantastic flexibility for mitigating taxes year after year. So, when we’re advising a family business, a family trust will almost always be involved.
Other trust options include unit trusts and hybrid trusts. These are typically used when you want benefits of a trust structure but have business owners from different families.
Within the conversation of saving tax using structures, a self-managed superannuation fund (SMSF) may be considered. For instance, the business premises might be owned by a self-managed superfund.
Since businesses come in all different shapes and sizes, family and non-family members, small or big business aspirations, there isn’t a one-size fits all solution.
That doesn’t mean that structuring has to be hard. In fact, it’s often a simple process. But, it’s vital to get right from the beginning, and revisit it from time to time to ensure it remains tax-effective as the business grows.
If you’re unsure about the tax effectiveness of your structure, please reach out to us, as we’d love to help.
Step 2. Proactive Tax Planning
- Tax Minimisation Plans
- Financial Forecasts
- Tax Returns
- GST
You’re either a reactive business owner dealing with tax after the fact, or a proactive business owner mitigating your tax burden now and in advance.
Read Key Points & Transcript
Bare Minimum Tax
video key points
- Tax management can be reactive, dealing with obligations after the fact, or proactive, strategising for future success to minimise tax and compliance hassle.
- Initial business structuring is crucial for tax minimisation, with ongoing support to navigate tax obligations and strategies to reduce tax liabilities.
- Close of the financial year involves strategic advice to understand and potentially reduce upcoming tax bills, followed by orderly tax return preparation and lodgement.
- Munro’s prioritises clear, understandable solutions, ensuring clients can make informed decisions, supported by our high client satisfaction and Top 2% ranking among Australian Accounting Firms.
- To further explore how to manage your tax obligations proactively and benefit from expert guidance, consider reaching out as your next step.
Presented by: Christine Prasetia
video transcript
You can approach tax in one of two ways:
- You can reactively treat it as something that needs to be done after the end of each year; or
- You can proactively manage the situation for future success.
We are in it to help you find tax success in the now and future.
For instance, upfront when you’re starting or buying a business we’ll work through your goals and situation to structure the business for tax minimisation.
Then we’ll work with you as things naturally pop up from time to time, where you need help knowing what your tax obligations are and how best to manage them.
Both to mitigate the hassle of compliance and to reduce tax as much as possible.
As each financial year draws to a close, we’ll work with you so you understand the upcoming tax bills and, where possible, what actions you can take to reduce them further.
Then, finally, after the tax year we’ll get all your tax returns in order and lodged.
So, you’ll find that working with us, you have a trusted confidant who’ll advise you on best practice accounting. Whenever a complex situation arises, you’ll be expertly guided to the optimal result…. and very importantly, it is a highly held value of ours to keep things understandable with clear solutions so you can make the best decisions.
As you’ll see from our many 5-star Google Reviews, you’ll be in great hands. In fact, you’ll be helped by one of the Top 2% ranked Australian Accounting Firms.
We are looking forward to speaking with you soon.
Step 3. Complex Tax
- Complex Situations
- Unique Transactions
- Division 7A
- Consolidations
It’s true that many advisors can help with basic tax, but it takes a special mindset to uncover hidden solutions when the seemingly inevitable complex problems arise.
Read Key Points & Transcript
Complex Tax
video key points
- We believe that Munro’s stands out for delivering exceptional tax advice, backed by proof of our pioneering role in the blockchain industry, showcasing a commitment to innovation and excellence.
- Our team’s dedication to problem-solving is highlighted by history of successful handling of challenging cases.
- Our experience extends to rectifying historical tax issues for businesses, employing outside-the-box thinking to mitigate tax impacts and prevent future problems, demonstrating a proactive and strategic approach to tax planning.
- Munro’s track record of excellence is observable in our large collection of 5-star Google reviews.
- Please feel welcome to reach out for assistance with complex tax issues or proactive tax planning.
Presented by: Carl Hansen
video transcript
Let’s be very open, there are many good advisors who can handle tax very well. On the spectrum between poor, average and exceptional, we sit in the group delivering exceptional advice…. and we have the proof to back this up.
For instance, there’s our pioneering involvement in the blockchain industry.
Years ago, we were one of, if not the first, to commit extensive professional help to those using blockchain and cryptocurrency. We did this because we saw many Australians struggling to understand their tax obligations, and even more importantly, failing to take the necessary steps to legally minimise their taxes.
Through this process, we gathered a wealth of knowledge of how to help our fellow Australians. This led us down a journey where many people came to us with some extraordinarily complex situations. Being passionate about finding clever ways to legally minimise tax, we took those challenges on. We’re extremely proud to say those clients well and truly got their money’s worth.
Sometimes people running large, or small, businesses come to us to double check the state of their tax affairs. Unfortunately, things aren’t always perfect and we’re tasked with fixing up historical messes.
In situations like this, we help those business owners come to terms with the tax dilemma they face, and with our experienced outside-the-box thinking put in place measures to mitigate the tax damage as much as legally possible. Then we move forward to a programme designed to proactively mitigate problems arising in the future.
There are a great many additional examples we could provide. Including the clever top-hatting solution we implemented to proactively help a client alleviate their Division 7A problems.
But rather than you just take our word for it, we suggest you take a look through the collection of 5 star reviews submitted on Google, which place us in the Top 2% of Australian Accounting Firms.
If you have a complex tax problem, or want to proactively avoid them, please do let us know. We’re here to help.
Step 4. Save Tax When Selling
- Small Business Concessions
- CGT Rollovers
- Transfer Duty Exemptions
- GST-Free Going Concern
The last thing you want when it comes to selling your business is an unnecessarily large tax bill. If you plan ahead from the start, you could be in for a very happy final outcome.
Read Key Points & Transcript
Saving Tax When Selling
Smart and proactive tax strategies save hundreds of thousands
video key points
- Smart and proactive tax strategies, implemented well in advance, can significantly reduce or even eliminate capital gains tax upon selling your business, allowing you to retain more of your hard-earned wealth.
- Utilising legal tax measures such as the Small Business Rollover and Retirement Exemption can result in substantial savings, particularly for those over 55, enabling full access to sale proceeds without the need for superannuation contribution.
- The introduction of a “bucket company” can spread and reduce taxes over several years, offering the opportunity to reinvest initial savings into wealth-accumulating assets like blue-chip shares.
- Forward planning, ideally a couple or more years before selling, is crucial to identify and implement the most effective tax strategies tailored to your unique situation.
- Preparation is key to ensuring a tax-efficient transition of your business, whether it’s being sold or passed to the next generation, and seeking professional guidance early can facilitate this process.
Presented by: Rama Yudhistira
video transcript
When it comes to selling your business, you want to make sure that you keep as much of your hard-earned wealth in your wallet.
Here at Munro’s, we are proud to have successfully saved our clients hundreds of thousands of dollars in taxes using smart and proactive tax strategies. We’ve done this through legal measures, to ensure that our clients can sleep peacefully at night.
Here’s an example of what’s possible.
In this example, our hypothetical client is selling their business, including business premises. Normally, this would trigger significant capital gains tax. However, through comprehensive research and analysis, we are able to help our client utilise both the Small Business Rollover and Retirement Exemption to reduce the capital gain tax down to NIL.
This is the perfect strategy for our hypothetical client since it also allowed them to access all of the sale proceeds because they’re over the age of 55 years, meaning they don’t need to deposit the sale proceeds to their superannuation account.
As another example, we might have a client selling their business who could benefit from the use of a “bucket company”. How so? By spreading out the taxes on the business sale over many years.
This not only delays some of the taxes, but also reduces them too.
In this example, the benefit to our hypothetical client could include their ability to use the initial savings to make investments in blue-chip shares, which then grow in value and allow them to accumulate more wealth.
Smart and proactive tax strategies are not limited to what we have just shared with you. The most important thing for you to understand is that often, to save tax, you need to be proactive.
A couple or more years before selling, you should instigate forward planning. This can allow sufficient time to identify the best strategies for your unique circumstances, as well as sufficient time to implement changes, if necessary, a couple or more years before sale.
So, if you have a business, naturally at some stage it will be sold or handed down to the next generation, and to achieve this in a tax effective manner we highly recommend you prepare in advance. Please feel free to reach out, we would love to help you.
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