Tax Planning Part 3: Tax Planning for Small Business Owners
- Arnold Shields
- Jun 3, 2024
- 3 min read
Updated: May 13
If you’re a small business owner in Australia, tax planning isn’t just about compliance, it’s a key lever for growing and protecting your business.
In Part 3 of Dolman Bateman’s 2024 Tax Planning Series, we unpack the best tax strategies to help you minimise tax, reinvest more into your business, and structure operations for long-term success.
These aren’t abstract theories, they’re practical tools that can boost your financial outcomes and help your business thrive. Let’s dive in.
1. Instant Asset Write-Offs: Immediate Tax Savings
The Australian Taxation Office (ATO) allows eligible small businesses to instantly write off the full cost of assets up to a specific threshold, provided they are first used or installed and ready for use in the income year.
Assets that qualify include:
Business vehicles
Equipment and tools
Technology and office furniture
Why it matters: Writing off assets immediately means you reduce your taxable income in the year of purchase, improving your cash flow and providing fast return on capital investment. Always check the current ATO thresholds before making purchases.
2. Income Splitting: Use Lower Tax Brackets to Your Advantage
Income splitting is a legitimate and effective way to reduce your overall tax bill. By spreading income across multiple family members or entities, you can take advantage of lower marginal tax rates.
Example: Employing your spouse or adult children in genuine roles — such as bookkeeping, admin, or marketing — and paying them a market-rate wage helps you lower your taxable income while keeping wealth in the family.
This strategy is especially effective when done through a trust or company, and when supported by clear documentation and fair market payments.
3. Reduced Company Tax Rates: Keep More of What You Earn
If your business operates as a company and has an aggregated turnover of less than $50 million, you’re eligible for the reduced corporate tax rate of 25% in the 2024–25 income year.
This rate is lower than the top personal tax rate, which can reach 47%. Retaining profits in the company and reinvesting them can lead to significant growth opportunities.
Example:
Profit: $100,000
Tax at 25%: $25,000
Remaining capital to reinvest: $75,000
4. Small Business Tax Concessions: Take Full Advantage
The ATO offers a suite of concessions for small businesses, including:
Simplified depreciation rules
Immediate deductions for start-up expenses like legal or marketing costs
Simplified trading stock rules
These concessions are designed to help reduce your tax bill and free up capital during your business’s most crucial stages.
Structuring Your Business for Tax Efficiency
The legal structure of your business has a major impact on tax outcomes, liability, and long-term flexibility. Here's a quick breakdown:
Sole Trader or Partnership
Simple and cost-effective
Good for low-income or early-stage businesses
Less flexibility in income splitting
Company
Fixed corporate tax rate
Better for retaining profits
More compliance and regulatory responsibilities
Trust (Discretionary or Unit)
Excellent for income distribution among family members
Flexibility to shift income to lower-taxed beneficiaries
Trusts don’t pay tax, but the beneficiaries do — at their marginal rates
Professional Tip: The ideal structure depends on your industry, business goals, family situation, and income level. Always consult a tax advisor before setting up or restructuring.
Other Tax-Effective Moves to Consider
Superannuation Contributions
Contributions to your super fund are tax-deductible (up to the concessional cap)
A strategic way to lower tax while building retirement wealth
Business Debt Structuring
Ensure loans are used for income-producing purposes to claim interest deductions
Avoid mixing private and business debt
Record-Keeping and Compliance
Keep detailed records of expenses, contracts, payroll, and asset purchases
Use cloud accounting systems like Xero or MYOB to stay audit-ready
Final Thoughts
Smart tax planning gives you control over your business’s future. From asset write-offs and tax concessions to leveraging the reduced company tax rate and using trusts, there are plenty of opportunities to optimise your outcomes.
These strategies don’t just save tax — they support better cash flow, stronger reinvestment opportunities, and long-term financial resilience.
Need help implementing these strategies for your business? Call us on (02) 9411 5422 or reach out via our website.
Disclaimer:
The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. While every effort has been made to ensure the accuracy of this content at the time of publication, tax laws and regulations may change, and individual circumstances vary. Dolman Bateman accepts no responsibility or liability for any loss or damage incurred as a result of acting on or relying upon any of the information contained herein. You should seek professional advice tailored to your specific situation before making any financial or tax decision.