When you’re running a business, small tax oversights compound into big numbers. What might be a $10,000 mistake for a smaller business can easily become a $100,000+ oversight at a larger scale.
Working with business owners for over 30 years, the Accounting team at Navigate Advisory has noticed some recurring blind spots. These aren’t basic bookkeeping errors – they’re strategic misses that can cost serious money.
Read below the five tax mistakes most business owners don’t know they’re making.
Mistake 1 – The Division 7A Danger Zone
This is the big one – and it catches out even sophisticated business owners. Division 7A rules kick in when you use company funds for private purposes. It sounds simple, but the implications can be huge.
Common Division 7A traps:
- Taking money out as loans without proper documentation
- Using company assets for private purposes without proper payments
- Incorrectly handling trust distributions
- Missing minimum yearly repayment requirements
Real example: A taxpayer recently faced a $200,000 tax bill because drawings from their company weren’t properly structured as either dividends or complying loans. That’s money that could have funded their next business expansion.
Mistake 2 – The Trust Distribution Trap
The ATO’s spotlight on trust distributions has intensified. Yet many successful business owners still fall into costly distribution patterns that trigger unnecessary tax bills.
Common mistakes we’re seeing:
- Making distributions without proper documentation
- Not considering the tax implications of different beneficiary types
- Missing deadlines for trust resolutions
- Creating patterns that attract ATO attention
Getting this wrong doesn’t just mean paying more tax – it can mean paying the top marginal rate on significant portions of your business profit.
Mistake 3 – The Business Structure Blindspot
You started with a simple structure. Now you’re turning over serious revenue, but your structure hasn’t evolved to match. This mismatch can cost hundreds of thousands over time.
Watch out for:
- Operating through outdated structures that leak tax
- Missing opportunities to separate risk from assets
- Not planning for eventual business sale or succession
- Inefficient profit extraction methods
Mistake 4 – The Succession Planning Vacuum
You’ve built something valuable. But without proper tax planning, transitioning ownership could trigger unnecessary tax events.
Critical areas:
- Small business CGT concessions eligibility
- Timing of ownership transitions
- Asset protection structures
- Tax-effective wealth transfer to the next generation
Mistake 5 – The Superannuation Strategy Shortfall
At your business’s scale, super isn’t just about retirement – it’s a powerful tax planning tool.
Yet many owners:
- Miss contribution timing opportunities
- Overlook property development strategies within SMSF rules
- Don’t align business exit with super strategy
- Fail to maximise concessional and non-concessional caps
Real example: A taxpayer recently saved $180,000 in tax by correctly timing and structuring their super contributions. Small changes, big impacts.
Your Next Strategic Moves
For businesses at your level, tax is an ongoing strategy. Here’s what we recommend:
- Get a Division 7A health check
- Review your structure against your current business scale
- Plan succession early – tax-effective transition takes time to set up
- Set up yearly tax strategy reviews
Have you avoided these five tax mistakes?
The Path Forward
At Navigate Advisory, we help business owners make better decisions that benefit your bottom line.
Because when your whole financial world makes sense, you gain the power to say ‘yes’ to bold life choices.
- Business tax and structures
- Business forecasts and profit
- Progress and accountability
- Succession planning
- Exit planning
Find out more about our Business, Accounting and Tax Services here.
Book an introductory chat with one of our accountants at navigateadvisory.com.au/contact/
Navigate Advisory has offices in Balmain, Brighton-Le-Sands and Hurlstone Park.