The end of financial year is drawing close - are you ready? Have you claimed all your entitlements, or do you not even know what you can claim?
"Sometimes, it's all the little things you do that make the difference. It's true in life, and it also happens to be true for tax planning."
You still have time to consider my top tax tips before the end of financial year. Don't short-change yourself -
Top Ten Tax Tips
Start thinking now about the following:
*** How the major measures announced in the Budget might affect you, the main ones for small business appear to be: A cut of 1.5% in the company tax rate for small businesses A 5% tax discount for unincorporated small businesses. (I suspects this will be applied like the old Entrepreneurs tax offset). In addition small businesses will be able to write off in one year assets valued at up to $20,000 each. The rate cuts means if you can bring forward a claim you are likely to get a greater reward, then claiming the deduction next year when rates are lower. So, with this in mind:
Is there a relevant education course you have been considering, or maybe even subscriptionsto professional journals and memberships to professional associations? Sign up before the end of the financial year.
If you intend travelling for business early next financial year, you could consider booking and paying for the airfares and accommodation before 30 June.
Consider prepaying insurance premiums if they fall in July or August.
Explore the possibility of prepaying rent on your business premises.
If required, purchase assets and equipment, office equipment and motor vehicles. "You could take advantage of the $20,000 instant write off, announce in the budget, prior to 30 June."
Analyse your debtor's ledger before 30 June to identify bad debts. "Make a genuine attempt to recover the debt by year-end so you can decide whether or not the debt is 'bad'. If so write it off. This will ensure that you don't pay tax on income you didn't receive."
Consider repairs to a rental property or business premises.If the repairs are brought forward (i.e. before 30 June) it allows you to write off the expense in this financial year. But beware, Don't confuse 'repairs' with 'improvements and renovations' as these are handled in a different way.
Consider super contributions: An individual taxpayer aged 50 or below may make eligible superannuation concessional contributions of up to $30,000 under the current rules. For those over 50 the limit is $35,000. The limit represents the most you can claim as a tax deduction in one year.
For higher income earners the additional 15% tax on super should be considered before making additional contributions. For lower income earners, the government will make a co-contribution equal to 50 cents for every dollar you contribute if your income is below $34,488, up to certain limits.
The little things will also help, like filling up the stationary cupboard, filling the car with fuel, getting that service that is due in July. Do all these before June 30. But when it comes to Motor Vehicle expenses: The way to get the greatest deduction from your motor vehicle is to prepare a log-book, documenting each journey during a continuous 12-week period.
But most important tip: Plan for taxes. Adopt a thorough, tailored tax strategy and budget for your tax each quarter and each year so you don't get caught out. It's not uncommon for business owners without a tax plan to find themselves in arrears with tax debts. Interest charged on your debt can quickly escalate and may become overwhelming - plan for tax bills in your budget, and ensure your budget has an inbuilt plan to minimise your tax.