Pharmacy owners, are you paying too much tax?

Federal Budget for Pharmacy

Whilst the recent Federal Budget announced $345.7 million in funding to embed pharmacists in aged care facilities which has been welcomed by many invested in the pharmacy industry, PSA National President, Associate Professor Chris Freeman, stated that “the fact that fair remuneration for services that pharmacists provide has once again been overlooked by the Government is a bitter pill to swallow.”

With fair remuneration off the table for another year, it is imperative that pharmacy owners ensure that they have strategies in place that maximise their tax savings and protects their bottom line.

Questions abound:

• Are you paying too much tax?
• How do you know?
• Is your mate at the pub right – can you really buy a new car and write-the whole thing off?
• Is Officeworks onto something when they say you should stock up?
• Do retailers really have your best interest at heart when their ads say to hurry now before the EOFY sales end…

And it can feel hard to know what to do and what to decide. Tax is complex and difficult to navigate for anyone that hasn’t specialised in the area. How do you make it simple?

1. Start with planning.
2. Time it well,
3. Combine it with accurate information

And voilà – a recipe for smart tax decisions and savings has been created.

Many pharmacy owners have decision fatigue – you have ridden the wave of “unprecedented times” and are navigating the “great resignation”. Tax planning may seem another thing that can wait until you have more energy and the head space to handle it. But, a lack of planning may be the reason you give away your hard-earned profits to the tax man or are caught off guard with a surprise tax bill.

A tax plan gives you time and options – it can help you to keep more of your profits, allow you to reinvest and pay down more debt.

A simple guide to tax planning:

1. Who needs tax planning?

Whilst it’s not quite as broad as saying anyone who pays tax, or anyone who owns a business it can be said that anyone that has the potential to save on tax, needs a tax plan. This may mean a pharmacy owner that’s made a profit, it could be a pharmacy owner that’s made a loss, it could be an investor who has financed a new opportunity, it could be the holder of trusts.

To put simply, a lot of people, especially pharmacy owners need tax planning.

2. When do you need to consider tax planning?

April to May each year – at the latest June. You need time to put your tax planning initiatives into action – the sooner you start, the better (although not before April – you want a solid nine months of trading under your belt to reliably forecast your full year results).

3. What can you expect from tax planning?

A decision-making tool. Your tax plan will outline:

• Where your profit should land for the year and what this means for your business and you
• A summary of opportunities and actions for you to implement and how they will improve your expected tax position
• Guidance and support to implement the proposed actions
• A cashflow timeline so you can budget accordingly (and avoid any nasty surprises!).

The side hustle of tax planning

The fun doesn’t have to end here! This process can serve dual purposes.

Let’s say you also have bank funding/covenant reporting, insurance requirements, etc – your annual tax planning, should also be a time to consider how you can ‘shore up’ your position – make certain that you will comfortably meet your compliance targets or give yourself the heads up on areas that require your attention before the end of the financial year. You‘re on the home stretch, now is the time to plan.

Take control of these final few months by planning for your success.

This article is more than adding another ‘to-do’ to your list before 30 June. This should impress upon you the importance of planning and how it empowers you. As a pharmacy owner, you have the power to change things; you are a decision maker. Decision making doesn’t have to be hard. In fact, it becomes easier when you have a plan. So, make the easy to decision to plan for your success.

Contact us to get you started.