Content reviewed and verified by Graham Chee, with FCPA-led practice at Local Knowledge, Mascot NSW. Continuous CPA Australia member since 1986. Prior career at Goldman Sachs, BNP Investment Management and Merrill Lynch..
TL;DR
Good tax planning is not about aggressive schemes — it is about structuring, timing and documentation that legitimately reduces what you pay and survives an ATO review. Here is how we approach it for Sydney businesses.
Key Takeaways
- Timing of income and deductible expenses across the 30 June line — prepayments, asset purchases, and repairs.
- Superannuation: concessional contributions (including catch-up of unused caps) made and received by the fund before year end.
- The instant asset write-off for eligible small businesses — confirm the threshold and dates that apply to the current year before relying on it.
- Division 7A: ensuring loans from a private company to owners are on complying terms so they are not treated as deemed dividends.
- Trust distribution resolutions signed before 30 June, consistent with the trust deed and section 100A guidance.
Why tax planning matters before 30 June, not after
The single most common mistake we see in Sydney is business owners who think about tax in July, once the year is already closed. By then almost every lever has been pulled. Real tax planning happens in the last quarter of the financial year — typically April to June — while you still have time to bring forward deductible expenditure, make additional superannuation contributions, review your trust distributions, and decide how profit should be recognised and distributed.
The goal is never to pay the least tax possible at any cost. It is to pay the legally correct amount, using the concessions Parliament actually intended for small business, with documentation strong enough that if the ATO asks a question, the answer is already on file. That distinction — defensible planning versus aggressive avoidance — is the line every reputable CPA practice works to. Schemes that rely on artificiality attract Part IVA and penalties; sound structuring does not.
Structure is the foundation everything else sits on
Your entity structure determines your tax rate, your access to concessions, and your exposure. A base rate entity — broadly, a company with aggregated turnover under $50 million and no more than 80% passive income — is taxed at 25%, versus 30% for other companies. A discretionary (family) trust gives flexibility to stream income to beneficiaries on lower marginal rates, but attracts scrutiny under section 100A and the ATO guidance in TR 2022/4 where distributions are not genuinely for the beneficiary’s benefit.
We frequently review whether a sole trader should incorporate, whether a trust should have a corporate beneficiary (a “bucket company”) to cap tax at the company rate, and whether the current structure still fits a business that has grown. Restructures can often be done using the small business restructure rollover so that changing structure does not itself trigger a tax bill — but only when the conditions are genuinely met.
Legitimate levers we review every year
Timing of income and deductible expenses across the 30 June line — prepayments, asset purchases, and repairs.
Superannuation: concessional contributions (including catch-up of unused caps) made and received by the fund before year end.
The instant asset write-off for eligible small businesses — confirm the threshold and dates that apply to the current year before relying on it.
Division 7A: ensuring loans from a private company to owners are on complying terms so they are not treated as deemed dividends.
Trust distribution resolutions signed before 30 June, consistent with the trust deed and section 100A guidance.
Carrying forward or using tax losses, and the continuity/similar-business tests for companies.
CGT small business concessions when selling assets or the business itself.
PAYG instalment variation where profit has genuinely fallen, to protect cash flow.
How we run a tax planning engagement
Interim numbers
We prepare management accounts to roughly March–April so we are planning on real figures, not guesses.
Project the year
We forecast taxable profit to 30 June across each entity and each individual in the group.
Model the options
We test contribution levels, distributions, asset timing and structure against marginal rates and cash flow.
Document and decide
We prepare the resolutions, minutes and file notes that make each decision defensible.
Execute before 30 June
Payments, contributions and paperwork are completed while they still count for the year.
Worked example
A Sydney trades business trading through a discretionary trust projected a $220,000 profit for the year. Distributing the full amount to the two working owners would have pushed both into the top marginal bracket. Instead we distributed enough to each owner to use their lower brackets, made catch-up concessional super contributions for both (using unused cap from prior years), and streamed the residual to a corporate beneficiary taxed at 25%. The combined effect legitimately reduced the group tax bill by roughly $28,000 versus the “distribute everything to the owners” default — with every resolution signed before 30 June and filed.
"The best tax result is the one you can explain to the ATO without flinching."
Frequently asked questions
Q.Is tax planning the same as tax avoidance?
No. Planning uses concessions the law provides — super caps, small business CGT concessions, legitimate structuring. Avoidance relies on artificial arrangements whose dominant purpose is a tax benefit, which the general anti-avoidance rule (Part IVA) can unwind, with penalties. We only recommend positions we can defend on the file.
Q.When should I start planning?
Ideally by April–May, so there is time to act before 30 June. Some strategies — like structure changes or building a super contribution history — are best considered a year or more ahead.
Q.Should I buy assets just to get a deduction?
Only if you needed the asset anyway. A deduction returns you the tax rate on the spend, not the whole cost. Spending a dollar to save 25–47 cents still costs you money unless the asset earns its keep.
Q.What is a bucket company and do I need one?
A corporate beneficiary that receives trust distributions and pays tax at the company rate, capping the rate on retained profits. It suits businesses that generate more profit than the owners need to draw personally — but the loan back to the trust must comply with Division 7A.
Q.How much can super save me?
Concessional contributions are generally taxed at 15% in the fund (30% above the Division 293 income threshold), often well below your marginal rate. Within the annual cap it is one of the most reliable, ATO-sanctioned levers available.
References
References
- ATO — Company tax rates (base rate entities) — Australian Taxation Office
- ATO — Trust distributions and section 100A (TR 2022/4) — Australian Taxation Office
- ATO — Division 7A private company loans — Australian Taxation Office
- ATO — CGT concessions for small business — Australian Taxation Office
About the Author
Graham Chee, FCPA, CPA, GRCP, GRCA
Principal and Founder, Local Knowledge
Graham Chee is the principal and founder of Local Knowledge, an FCPA-led Australian practice that brings institutional-grade compliance, investment-structure and intellectual-property experience directly to owner-managed businesses. Graham is a Fellow of CPA Australia (FCPA since November 2005, continuous CPA member since 1986) and holds the OCEG Governance, Risk & Compliance Professional (GRCP) and Governance, Risk & Compliance Auditor (GRCA) designations. His prior career includes senior roles at Goldman Sachs, BNP Investment Management and Merrill Lynch. Graham was previously portfolio manager of the Asian Masters Fund (IPO December 2007 – 31 December 2009), which returned +29% in AUD terms versus the MSCI Asia Pacific (ex Japan) benchmark. He signs off on 100% of client files personally.
Areas of Expertise:
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This article provides general information only and does not constitute financial, legal, or tax advice. Speak with our principal for advice specific to your circumstances. Every file is signed off by our principal under the CPA Code of Ethics.
Graham Chee FCPA, CPA, GRCP, GRCA · Principal, Local Knowledge · Mascot NSW · CPA-signed files