Minimise Tax Deductions This Year
TAX PLANNING MUST DO'S BY 30 JUNE 2019
With the end of the financial year close, it's time to think about tax planning options. We've put together a list of things to focus on, especially for businesses.
So, why would you go to a bit of trouble? Tax is just a cost too so can be legally managed, and in the end it's all about the benefits for you. If you save tax what could you do with the savings?
- Pay off your home loan earlier
- Set more aside into savings or superannuation for retirement
- Have a holiday
- Acquire an investment
- Improve your home or lifestyle.
Some things must be done by 30 June , if not, deductions cannot be claimed this year, especially:
- Superannuation contributions
- Instant asset write-off (now up to $30,000)
- Write off bad debts in Accounts Receivable
- Resolution by a Trust to distribute profits
- Defer the billing to or receipts from customers until after 30 June.
Every year when we receive your tax records we run through a list of items with you to see if they may be available to claim, which will reduce taxable profits. They may have been paid from another account, or could be accrued at year end, or be an immediate write-off, etc. We don't have to know about them before 30 June so haven't dealt with them here. This is only about the several items which to get a deduction must be paid by 30 June (actually the 28th, because the 30th is a Sunday).
To keep it simple, we'll keep it short and only what can be done, not the reasons why. If you want to know more or why, give us a call anytime.
| Superannuation |
· The maximum personal super contribution is $25,000. This must be actually received by the Fund before 28 June, so allow a couple of days to clear. · Staff super is still 9.5% and is a tax deduction in this year if paid and received by the Fund before 28 June. · If you are paying a pension from the Fund, ensure the annual minimum is paid by 28 June. · If you wish to increase your super balance, a non-concessional contribution (that is, not tax deductible) of $100,000 can be made by 28 June. If you are doing this, please call us first as excess contributions are taxed at 47%. |
| Instant Asset Write-Off |
Assets costing less than $30,000 (excl. GST) can be claimed in full if paid for and installed by 30 June. The deduction can be claimed even if financed. (Does it make sense to buy it this year? See our Blog 30/05/19). |
| Defer Income and Capital Gains |
If possible, defer issuing customer invoices and receiving payments from customers until after 1 July. If you are considering the sale of a property or a business, the contract date should be after 1 July (CGT takes its timing from contract date, not settlement). |
| Bring Forward Expenses |
If you account on the Cash Basis, pay suppliers and expenses by 28 June to claim a deduction in this year. (Even better – can you get a discount for early payment?). |
| Bad Debts |
Review Accounts Receivable, and write-off all uncollectable amounts. Ensure these are entered in the accounting records before 30 June. |
| Motor Vehicle Log Books |
If you want to claim for cars (not 1 tonne/work vehicles) you must have kept a Log Book for each vehicle for 12 consecutive weeks, started before 30 June. Also, record the odometer reading at 30 June. The log book is used to claim a tax deduction for the business proportion, and also for Fringe Benefits Tax calculations. |
| Trust Resolutions |
Ensure that Family (Discretionary) Trust Resolutions are prepared (now in process) and signed and returned to us by 30 June. Even if the profit is not yet certain, distributions can be expressed as percentages. |
| Stock Take |
All businesses must prepare on 30 June a detailed stock list and/or work in progress. Write off any obsolete or worthless items (keep a list). If the stock includes consumable stores or spare parts that will be used within 3 months, these can be expensed rather than included in closing stock. Stock can be priced at the lower of cost, market or replacement value. Work in progress should include materials, labour and an allowance for overheads. |
If you are going to use any of these strategies and you are uncertain or confused, please call or email us and we'll go over your plan. Better to be certain!