Majority of small to medium businesses failing to use legitimate strategies to reduce tax

MOST small to medium businesses fail to exploit all of the strategies available to them to minimise their tax, according to a survey released by the Commonwealth Bank.

NATIONAL FEATURES - Your money - generic images of calendar with the words 'tax time' written in red texta on the 30 June diary entry.

MOST small to medium businesses fail to exploit all of the strategies available to them to minimise their tax, according to a survey released by the Commonwealth Bank.

The survey of 507 businesses conducted in late May found that only 51 per cent were writing down obsolete stock to cut their tax bills, despite 77 per cent being aware of the strategy.

The survey found only 23 per cent of the respondents paid bonuses to staff to reduce profit, 25 per cent prepaid interest on business loans and only 38 per cent reviewed their company’s capital gains tax position to see whether they were eligible for any small business CGT concessions.

“By taking a number of simple steps and speaking with a professional adviser early, businesses ... can potentially improve their financial position for the year ahead,” said the Commonwealth Bank’s Executive General Manager Local Business Banking Adam Bennett.

The survey found that 33.5 per cent of the respondents in NSW thought they had not maximised their opportunity to reduce tax liability last financial year.

It found that in NSW only 46 per cent of the respondents prepaid expenses such as rent and subscriptions, 49 per cent maximised their deductible superannuation contributions and 54 per cent wrote off bad debts.

The survey found 79 per cent of the respondents used an accountant, 22 per cent a bookkeeper, 19 per cent the ATO website and 13 per cent cloud-based accounting software.

Originally published as Majority of small to medium businesses failing to use legitimate strategies to reduce tax