Having a tax plan in place before 30 June will enable you to make strategic decisions to maximise your returns come tax time. As we draw closer to the end of financial year now is the ideal time to implement tax planning strategies. We’ve compiled a list of strategies to consider to help you minimise your liabilities and ensure your business is in good tax health.
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 revived 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 $10 million) should consider prepaying up to 12 months of next year’s expenses, such as rent, advertising, subscriptions, insurance etc.
Take advantage of $20,000 instant asset write-off
If you are a small business (turnover up to $10 million), you can get an instant tax deduction for plant and equipment purchased for your business where the item cost less than $20,000 (excluding GST). This can include a car, computer, business equipment etc. If you are thinking about buying new plant and equipment, make sure you do so prior to 30 June to get the deduction in this financial year.
Make payments that receive special tax treatment
Pay your June quarter superannuation, as superannuation is deductible in the year paid (assuming paid on time)
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.
Bear in mind 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.