How Small Businesses Can Benefit From Year-End Tax Planning
It’s almost the end of the financial year and now is the time to start thinking about how to minimise your tax liabilities. You’ve worked hard for every dollar of profit and you want to keep the maximum amount you can. Take heed of the following ideas to help pay less tax and keep more of your hard earned profits.
Prepayments are effective if you have the cash – Small Business taxpayers (as defined under Australian tax law) can make prepayments
(up to 12 months) on expenses (e.g. Loan Interest, Rent, subscriptions) BEFORE 30 June 2015 and obtain a full tax deduction in the 2015 financial year.
Put an end to bad debts – If you are looking at claiming a tax deduction for this year, then it’s vital that all bad debts are written off before the end of June. Writing off bad debts should also be undertaken with care and precision as specific rules need to be followed and all the appropriate procedures to collect the debt should be complete.
Stock evaluation – Completing a physical stocktake is recommended and it should be done before the financial year draws to a close. Watch out for obsolete stocks as they can be written off and you can benefit from a tax deduction.
Disposing fixed assets – If scraping assets is high on your agenda and then get moving and complete it before June 30 to claim a deduction.
Delay your income – This is not the time to seal off any business deal, well, not until July! Where practical, defer issuing further invoices and/or receiving cash/debtor payments until after 30 June 2015. Please note that the ATO will generally require you to pay tax on income that you have either received or become entitled to due to the completion of work.
Pay yourself some superannuation – Make superannuation contributions if you are under contributions limits and eligible to claim a deduction. The concessional superannuation cap for 2015 is $30,000 for persons of any age 49 and under & $35,000 age 50 and above. Do not go over this limit or you will pay more tax!
Note that employer super guarantee contributions are included in these caps and in order to claim a tax deduction in the 2015 financial year, the super fund must receive the contribution by 30 June 2015.
Pay your employees superannuation early – To claim a tax deduction in the 2015 financial year, you need to ensure that your employee superannuation payments have cleared your business bank account by 30 June 2015.
Bring forward expenses – Purchase consumable items before 30 June 2015. These include stationery, printing, office and computer supplies. You can also, make payments for repairs and maintenance (business, rental property, employment) before 30 June 2015.
How our Tax Planning Process works
First of all, we request from you details of your expected income and business profits for the 2015 tax year (1 July 2014 to 30 June 2015). This includes all wages / employment income, interest and dividends and rental income received, business profits / losses, and any capital gains / losses you expect to make.
Based on this information, we estimate your taxable income and your tax payable BEFORE any tax planning strategies. For example, we may calculate (based on your information) that you may have a taxable income of $100,000 for 2015. This would result in $26,947 tax and Medicare levy payable.
Secondly, we discuss all of your tax planning options.
Third, we provide you with a report that explains in plain English the tax planning strategies we recommend and exactly how much tax you will save.
And finally, we provide you with an easy-to-follow action plan to ensure that both you and we can do everything that needs to be actioned before 30 June.
Call us now on 08 6298 7320 or email us on info@resbc.com.au if you want to know more and pay less tax!
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