Another financial year has swung around and 30 June is now upon us and we are all thinking about those last minute tax deductions. So what are the tips?
Employer Super Contributions:
If you are a small business owner make sure you take advantage of super contributions for yourself. If you are over 49 years of age you can contribute up to $35,000 and get a deduction for your business. If you are 48 years of age or younger then you cap limit is $30,000. Remember employer super contributions are fully deductible for your business and contributes to your retirement plans.
Potential Capital Gains:
Defer any possible capital gains on sale of an asset until the new financial year. This will help in maximising the timing advantage for payment of any capital gains.
Have you been putting if off! It is now time to review and organise any repairs and or improvements needed to your workplace, equipment or investment properties.
Prepay business expenses:
Assess and consider your business’s cash flow position with the view to prepaying business expenses up to 12 months in advance. Pick up the extra deductions this year.
Business Write Offs:
Examine obsolete, out of date or damaged stock, so it can qualify for a write off. The lower your closing stock, the better for your tax position and business.
A big red alert! If a shareholder owes money to their company, appropriate documents must be prepared prior to 30 June. In the absence of documentation, the ATO may deem the loan as an unfranked dividend to you, resulting in an unexpected tax liability.
Keep your receipts:
Remember to always safeguard your receipts, invoices and other expense records. Absence of any of these and it means the ATO will not allow your deduction.
Dot your I’s and Cross your T’s:
Ensure all documentation is in order (minutes of meetings, resolutions etc) in relation to paying director’s fees, bonuses and non-salary payments, ensure all instances are duly recorded.
In relation to your personal or business End Of Year tax planning all the above options should be considered and weighed against the following points:
- Cash Flow – Do you need to buy it? Can you afford it? That is, don’t just buy stationery just for the deduction if you are already fully stocked;
- Forecast – Consider next year’s potential profits before you allocate deductions or report income. Before bringing forward expenses to this current financial year which would normally have been expenses next financial year, consider your forecast for your business growth for next year. If you expect profits to grow bringing forward expenses now will significantly affect next year’s tax liability;
- Don’t spend to gain deductions – Before you sign the dotted line, ask yourself “does my business really benefit from this purchase?”. Remember when you spend money for a tax deduction you will only get back 28.5 cents for each dollar spent.
The above are just some general tax saving tips – for specific advice to suit your individual or business needs, contact us to arrange a time to meet and go over your options. Coffee included.
Thank you from Steve Wilson (The Diligent Group)