NAB has identified the top five strategies business owners should consider when they’re preparing for End of Financial Year.

Executive General Manager of NAB Business, Cindy Batchelor said: “The end of the financial year is a busy time for businesses as they work to ensure their business and personal tax affairs are in the best shape possible for June 30.

“We know business owners are already doing a lot to prepare for the end of the financial year and to help them, we’ve identified five winning strategies to help build and protect their personal and business wealth in the most tax-effective way.

Ms Batchelor said, “Each of these strategies has the potential to make a significant difference to a business owner’s financial situation now and in the future. But you’ll need to take action before 30 June to benefit from some of the opportunities available.

“Now is a good time to sit down with your business banker and financial planner to look at the different strategies and work out which ones suit you and your business best.”

NAB’s top tax time strategies

1. Structure asset purchases to maximise cash flow

Business should regularly review how income-producing assets are funded and the amount of cash locked into them. Most depreciable assets can be funded with no upfront deposit, making it easy for you to secure vehicle and equipment finance before June 30.

You should also be entitled to claim an input tax credit for GST (if you are registered for GST) included in the price of the asset acquired and generally the interest you pay, plus the depreciation of the asset should be tax deductible to the extent the asset is used in your business.

2. Grow your super and claim a tax deduction

Tax can consume up to 49% (including the 2% Temporary Budget Repair Levy) of your income or investments, so if you’re self-employed (and satisfy certain other conditions), you may want to make a personal super contribution and claim it as a tax deduction. Contributions will be taxed at up to 15% in the fund or 30% for people who earn $300,000 per annum or more. The deduction can then be used to reduce income that would otherwise be taxed at your marginal rate of up to 49%.

You may also consider transferring existing investments ‘in specie’ into super to reduce your future income and capital gains tax liabilities. The transfers need to satisfy your super funds trust deeds and may be subject to capital gains tax and stamp duty. You also need to take into consideration your contribution caps. For non-concessional contributions, there is a ‘bring forward’ rule to allow larger contributions over any three year period for those under age 65.

3. Capitalise on existing concessional caps and avoid excess contributions

The cap on concessionally taxed super contributions in 2014/15 is $35,000 for those who were aged 49 or older on 30 June 2014 and $30,000 for all other age groups. If the full amount is not contributed, the remainder can’t be carried forward to utilise in the following financial year.

However, it’s also important not to overdo it. If the concessional contribution cap is exceeded this financial year, you will be taxed on the excess at your marginal rate less the 15% already paid by the fund. In addition, there is penalty interest charged to the extra tax you pay.

4. Protect yourself and your family

There are many types of insurance products, some offering lump sum payments whilst others provide ongoing income support.

Life and disablement insurance are lump sum, generally structured through either a superannuation fund or a personal policy. Income protection insurance is an ongoing income payment that can be set up via superannuation or in an individual’s name.

When purchasing through a super fund, you may be able to take advantage of a range of upfront tax concessions. Income protection may also be tax deductible if owned individually. Critical illness cover is another lump sum cover designed to provide you with funding for medical expenses lifestyle maintenance although this cover can’t be structured through superannuation.

5. Check your eligibility for the small business tax regime

Small business entities with a turnover of less than $2 million may be eligible for a range of tax benefits, including simplified depreciation and CGT concessions/exemptions.

It’s worthwhile checking your eligibility as part of your business succession plans.

More from NAB:

• What the Budget means for your personal and business tax
• Top 10 apps for small business
• Continuous improvement is key to business success

Important Note:

Any advice in this editorial has been prepared without taking into account your objectives, financial situation and needs. Before acting on this advice, you should consider its appropriateness to you. Further, National Australia Bank Limited is not a registered tax (financial) adviser or registered tax agent. If you intend to rely on any advice to satisfy liabilities, obligations or claim entitlements that arise, or could arise under taxation law, you should seek advice from a registered tax agent or registered tax (financial) adviser.