Business owners legally reduce their tax by planning before 30 June: running the right structure, timing income and deductible expenses, making concessional super contributions, and claiming every deduction the business is entitled to. The savings come from decisions made during the year, not from the tax return itself. A planning meeting a few months before year-end, built around a projection of your tax position, is where most of this work happens.
The Main Levers Available to Business Owners
Structure is usually the biggest lever. A company that qualifies as a base rate entity pays tax at 25%, which can sit well below an owner’s personal marginal rate. A family trust can distribute profit among beneficiaries in different tax brackets. Both come with rules attached, including Division 7A, the rule that treats certain company loans to owners as taxable income, so the structure needs to suit how you actually draw money out.
Timing is the next lever. Small business entities can generally claim prepaid expenses that cover up to 12 months, and asset purchases made before 30 June start depreciating in the current year. Bad debts need to be written off before year-end to be claimed. None of this saves tax if the spending doesn’t make business sense, so it works best alongside a cash flow view.
Super is a lever many owners underuse. Concessional contributions are generally taxed at 15% inside the fund, often less than the owner would pay personally. In some cases, unused cap amounts from earlier years can be carried forward, which suits owners with uneven income.
There are limits, and they matter. The ATO’s general anti-avoidance rules, known as Part IVA, look at whether an arrangement exists mainly to get a tax benefit. Good planning has a genuine commercial reason behind each step and is documented properly. That’s the difference between reducing tax and inviting an audit.
Planning for This Financial Year?
The earlier in the year these conversations happen, the more options stay open. Find out how proactive tax planning for business owners works at MYC Partners Accountants, and get in touch if you’d like Kylie and the team to look at your position.
