The end of financial year can be a frantic time for small-business owners as they scramble to get in last minute purchases and ensure their paperwork is in order.
Familiarising yourself with the deductions available to your business can help avoid the last-minute rush and potentially save thousands of dollars. Here are six end of financial year tax tips to help you attack your tax liability and help prevent that dreaded audit from the tax man.
Pay back your loans from the business
Borrowing money from your business to help with personal cashflow can be tempting. After all, it’s your money right? Well, according to the ATO, not really. There are laws in place to prevent company owners from withdrawing funds from their businesses as tax-free income.
Any forgiven debt from the business to its shareholders is assessed as taxable “unfranked dividends”. If you have borrowed money from your business this financial year, it must be paid back by 30 June, to avoid it being assessed as a dividend.