29: Strategic Tax Planning: Thinking Beyond This Financial Year

06/03/24 • 23 min

Smarten Up! The Tax and Business Podcast

Discover how your financial decisions today impact your tax savings tomorrow with our in-depth look at long-term tax planning.
Welcome to another insightful episode of Smarten Up! The Tax and Business Podcast. Today, we're diving into a critical yet often overlooked aspect of financial management — long-term tax planning.
While end-of-year tax strategies are essential, it's equally crucial to consider the lasting impact of your financial decisions. This episode focuses on the intricacies of Division 7A loans and how borrowing from your private company can affect your overall tax bill over time.
Whether you're a business owner or a wage earner, understanding these factors can significantly influence your cash flow and tax obligations.
In this episode of the Smarten Up! The Tax and Business Podcast, you'll learn:

Why it's crucial to consider tax impacts beyond the current financial year for both business owners and wage earners (0:50)
How different financial decisions impact long-term tax and cash flow (1:40)
Introduction to Division 7A loans and their commonality among business owners (2:30)
Details on borrowing money from a private company under Division 7A and the implications (4:20)
Requirements for repaying loans to avoid Division 7A tax implications, including compliant loan agreements (6:10)
The benchmark interest rates for 2024 and how they affect the overall cost of loans from your company (8:05)
Real-world scenarios illustrating the implications of Division 7A loans and the strategic decisions involved (10:45)
Alternatives to Division 7A loans: Other strategies for accessing company funds and the potential benefits of borrowing from a bank instead (14:30)
The importance of modelling and planning for long-term tax impacts with your accountant (18:20)
A sneak peek into the next episode: Additional factors that can influence long-term tax liabilities (21:00)

We hope this episode sheds light on the complex yet crucial aspects of long-term tax planning. Understanding the implications of Division 7A loans and making informed financial decisions can save you significant amounts in the long run. CONNECT WITH SALLY PRESTON
Website: http://www.smartsolutionstax.com.au/

Facebook: https://www.facebook.com/SmartSolutionsTax

Instagram: https://www.instagram.com/smartsolutionsau/

Smarten Up - The Tax and Business Podcast Facebook: https://www.facebook.com/profile.php?id=61555018481517

Smarten Up - The Tax and Business Podcast Instagram: https://www.instagram.com/smarten_up_podcast/

LinkedIn: https://www.linkedin.com/company/smart-solutions-tax-and-business-advisory/

Why it's crucial to consider tax impacts beyond the current financial year for both business owners and wage earners (0:50)
How different financial decisions impact long-term tax and cash flow (1:40)
Introduction to Division 7A loans and their commonality among business owners (2:30)
Details on borrowing money from a private company under Division 7A and the implications (4:20)
Requirements for repaying loans to avoid Division 7A tax implications, including compliant loan agreements (6:10)
The benchmark interest rates for 2024 and how they affect the overall cost of loans from your company (8:05)
Real-world scenarios illustrating the implications of Division 7A loans and the strategic decisions involved (10:45)
Alternatives to Division 7A loans: Other strategies for accessing company funds and the potential benefits of borrowing from a bank instead (14:30)
The importance of modelling and planning for long-term tax impacts with your accountant (18:20)
A sneak peek into the next episode: Additional factors that can influence long-term tax liabilities (21:00)

Previous Episode

28: Navigating The Inevitable – Death and Taxes

Grim but essential — don't let death and taxes blindside you or your loved ones. This episode covers key tax questions to ask when drafting a will, acting as executor, or receiving inheritance.
Death and taxes — two certainties in life that intersect when someone passes away. tax implications can significantly impact the assets and wealth you leave behind or inherit from a deceased estate. Today, we will tackle the subject matter head-on, exploring crucial tax considerations at every stage.
If drafting a will, understand how assets will be taxed when divided among beneficiaries, and the potential advantages of including the basics of a testamentary trust. As an executor, be prepared to file outstanding tax returns, apply for estate tax file numbers, and manage CGT events if assets are disposed of. And for beneficiaries, know the implications of inheriting different asset types — pre/post CGT, main residences, and business interests.
In this episode of the Smarten Up! The Tax and Business Podcast, you'll learn:

Defining key death and tax terms — beneficiary, executor, legal personal representative (1:12)
Tax on assets when you die — the CGT rollover provisions (3:40)
What is a testamentary trust and why include one in a will? (6:57)
Tax obligations if you are the executor of an estate (12:07)
Tax implications for beneficiaries inheriting different asset types (16:12)
Preserving main residence exemption and small business CGT concessions (20:28)

Don't be caught unaware when navigating the tricky crossroads of death and taxes. Seek professional advice early and be prepared — it could mean the difference between preserving or eroding your wealth.
CONNECT WITH SALLY PRESTON
Website: http://www.smartsolutionstax.com.au/

Facebook: https://www.facebook.com/SmartSolutionsTax

Instagram: https://www.instagram.com/smartsolutionsau/

Smarten Up - The Tax and Business Podcast Facebook: https://www.facebook.com/profile.php?id=61555018481517

Smarten Up - The Tax and Business Podcast Instagram: https://www.instagram.com/smarten_up_podcast/

LinkedIn: https://www.linkedin.com/company/smart-solutions-tax-and-business-advisory/

Next Episode

30: Strategic Tax Planning: Thinking Beyond This Financial Year - Part 2

Discover how your financial decisions today impact your tax savings tomorrow with our in-depth look at long-term tax planning.
In this episode, Sally Preston dives deep into the world of future tax planning, exploring the strategic decisions business owners need to make today to ensure maximum cash flow and minimal tax liabilities in the long run.
From understanding the impact of borrowing against company profits to optimising business structures for favourable tax outcomes, Sally breaks down complex tax strategies into actionable insights. Discover how thoughtful planning can transform your financial future and safeguard your investments from unnecessary tax burdens.
In this episode of the Smarten Up! The Tax and Business Podcast, you'll learn:

Sally introduces the value and relevance of this episode’s topic — future tax planning beyond the current financial year (00:00)
How current tax-saving decisions impact long-term cash flow and tax liabilities (00:45)
The importance of structuring business affairs in a tax-effective way from the outset (01:30)
Comparing the tax implications of dividends paid to shareholders versus loans from the company (03:20)
Benefits and flexibility of having a discretionary trust as a shareholder (06:10)
The pros and cons of reinvesting profits within an investment company (09:00)
How grouping companies for tax purposes can simplify transactions and reduce liabilities (11:15)
Planning for business exit strategies to minimise tax on sale or inheritance (14:50)
The dangers of operating a business in a discretionary trust and how to avoid common tax pitfalls (17:20)
Why it’s crucial to consider long-term tax impacts when making business decisions today (20:10)
Recap of key points and encouragement to seek professional advice for personalised tax planning (22:50)

This episode sheds light on the complex yet crucial aspects of long-term tax planning. Remember, the decisions you make today can significantly impact your financial future. Stay informed, ask the right questions, and always consult with your advisors to ensure you're on the best path forward.CONNECT WITH SALLY PRESTON
Website: http://www.smartsolutionstax.com.au/

Facebook: https://www.facebook.com/SmartSolutionsTax

Instagram: https://www.instagram.com/smartsolutionsau/

Smarten Up - The Tax and Business Podcast Facebook: https://www.facebook.com/profile.php?id=61555018481517

Smarten Up - The Tax and Business Podcast Instagram: https://www.instagram.com/smarten_up_podcast/

LinkedIn: https://www.linkedin.com/company/smart-solutions-tax-and-business-advisory/