There are many ways to legally minimise your tax bill.
Here are 5 strategies to action before 30 June that will either reduce or minimise the amount of tax payable or delay the need to pay the tax for at least another 12 months.
- Delay deriving assessable income – where appropriate, and if it will not adversely affect your cash flow, consider deferring assessable income until after 30 June. Generally, income is considered to be earned when the payment has been received, the goods provided or the services performed (depending on whether you are on the cash or accrual basis). Simply not banking money received before 30 June until 1 July does not mean the income has not been earned.
- Bring forward deductible expenses. Small businesses (with a turnover of less than $2million) should consider prepaying up to 12 months of next year’s expenses, such as rent, advertising, subscriptions, insurance etc.
- Make payments that receive special tax treatment e.g. pay your June quarter superannuation, as superannuation is deductible in the year paid (assuming paid on time). Or purchase any depreciable assets costing up to $20,000 before 30 June 2017 to take advantage of the small business immediate write-off (see our previous article for more detail on this).
- Write-off bad debts – to be a bad debt you need to have brought the income to account as assessable income and exhausted attempts to collect the debt. A bad debt needs to be recorded in your system prior to 30 June.
- Review your stock valuation – write off any stock that is damaged or obsolete. Complete a stock take and remember that stock can be valued at the lower of cost or net realisable value.
Caution: the circumstances under which the above strategies can be applied are not applicable to all taxpayers, so please consult with us first.
If you haven’t done so already make an appointment for us to review your year-end tax position and investigate whether there are any measures you should undertake to improve your tax position. Give us a call on 07 5451 1118 or drop us an email at firstname.lastname@example.org