Hi all,
Company tax time. Need to get rid of some cash, already paid wages for the year for myself and partner.
See accountant next week, but i don't think he is over everything or is very conservative. Juat wanting options to take too him. I did see about a Loan to the Director.
Any other ideas?
Thanka.
Also, if you as the business owner and operator can’t think of anything the business needs, then just pay the tax on your profit.
Check out the 100% deduction for equipment like cars and other equipment. This constitutes advice under the tax rorting system so do not use it as it may get you in trouble or not.
Need to get rid of some cash,
Paying tax should help with that …
Get a new 300 series landcruiser!
$80k investments??
I know nothing about tax, only about how to spend.
OP said they have some cash not the UK GDP to spend. Sheesh.
Good way to make easy money. Order any Toyota basically or any hybrid car and re-sell for close to 10 grand extra. People will pay overs to skip the queue.
Loans to directors don't "get rid of cash" … spoiler alert, as a loan they have to be paid back and are not tax deductible in any event. I don't think this will achieve what you appears to be seeking to achieve.
Short of wishing to pay yourself/your partner more, options are limited.
The only viable way to "dump cash" is to either buy a heap of stuff for the business that is tax deductible … usually electronics including computers, etc., but of course be careful to ensure these are "legitimate business purchases" … or to pre-pay other business expenses such insurance premiums, etc.
If you want to get inventive, you could consider arranging for the company to make a large investment via a margin loan and pre-pay the interest on that. Be aware though that obviously any investment is subject to the normal investment risks and that interest, once pre-paid, is gone … you don't get it back if you decide to cash out early.
It does get rid of cash. From company account to director account.
OP doesn't realise even with cash accounting you don't pay profits on cash flow (just putting it in someone else's account doesn't stop it being taxed). You actually have to pay it out and can record it as an expense.
Enrol yourself into a tax deductible training class for English (spelling and when words should be lower case) and keyboard typing class. Or just F7 in Word.
Pay yourselves bonuses into a family trust.
But as always DYOR.
A family trust has to distribute it to the trustees, which would presumably be OP and partner. There's zero benefit.
Pay for consulting fees to your shell company in Noumea.
If you really want to go down the 'loan to director' path, make sure you have a fully-compliant Division 7A loan agreement, or else it gets treated as unfranked dividend of the company and assessable income to you.
Pay your employer that's in Singapore that may or may not have the same name as you.
Buy bitcoin. Transfer it to your other overseas hand. Sell it.
Oooh I got another one.
Lose it 'gambling'.
If you don't have any actual expenses/don't need anything - why not just pay the tax and suck it up?
Spending $100 to save $37 on tax or whatever tax bracket you're on is pretty stupid otherwise.
Is there anything that will be due soon that you can prepay?
You meant to reduce profit right? Super employer contribution up to $25k a year. Taxed at 15%.
For 2021-22, the maximum concessional super contribution for an individual is $27,500
nothing stops a business pre paying expenses. just make sure they don't go belly up before you use their goods/services
Loan to director — check out Division 7A. It's not that trivial and near the end of financial year is probably not the best time doing it. Moreover it's a "loan" so it has to be paid back.
A few options:
Yeah go and see your accountant.
If you have profits left over and no more expenses, you could keep the profits and just pay income tax on it?
exactly and only 25% tax for companies.. personal is a lot more
Employ the children, and "pay" them each $18k.
Happy to send you my BSB and account #
As a former tax accountant, I will never understand the desire to blow money on depreciable things just to avoid paying tax. It's like tax is the enemy and all other logic gets thrown out the window. So many clients were willing to buy a car that would basically sit there for $40k just to save $10k in tax.
If you've maxed out super contributions just pay the 25% tax and stick it in a term deposit or ETF or something. When that rainy day comes that you need it, pull it out as a dividend or reinvest it back into the business.
iTunes gift cards?
I agree with what @seraphin and @scotty have said.
I would really ask the accountant how getting rid of cash will do anything to the company tax liability. What you need is deductible expenses.
Easiest option could be buying a capital item and taken advantage of the immediate asset write off provisions.
However, for any $$ spend, one needs to consider if it is in the best interest of the business. It would not be a smart business decision if you are solely driven by the desire to avoid paying taxes. It is like property investors making an investment solely with the objective of the negative gearing provisions to reduce their tax liability. They don't know that a large part of the expense comes out of their pocket.
give some to charity
How about buying and hodl hard assets in the company's treasury and/or as trading stock?
Keep it in the company and pay tax. When you retire or take a year off or your partner takes time off, pay it out as a franked dividend. You can end up each pulling $100k or so out of the business without paying any additional tax (at today's tax rates).
There are good tax benefits in holding cash/bonds/stable investments in a company and then put the higher risk/capital gain investments in your own name/the name of the lower income partner.
Loans to directors is a dangerous path. Avoid