The time to start planning your tax strategies is now! To get you started, we’ve put together the top 7 tips for saving on your tax. These strategies should be implemented as soon as possible to maximise their impact and minimise the tax you pay.
- Review Your Debtors
Review the list of those who owe you money and write off any bad debts. Generally your income tax is payable on any invoices you have issued, whether you have been paid or not. Make sure you follow the rules to ensure the debt is bad and any necessary steps have been taken to collect the debt.
- Review Your Stock Levels
Conduct a stocktake before the end of the financial year as the higher your stock level, the higher your profit and therefore the higher your tax. Review and identify any old or out dated stock and remove or revalue it to its correct value. Any stock that is obsolete should be written off.
- Review Your Business Assets
Write off any obsolete assets and claim its remaining book value. Any assets up to $20k purchased before 30 June 2016 will be available for immediate deduction in the 2016 financial year. If you are planning on acquiring a new asset under $20,000 (ex GST and including installation costs), buy it and have it ready for use before 30 June 2016 to receive the tax benefit in 2016. If you do not require any assets or haven’t got the cast flow to afford them before year end, it is really important to remember you are able to write off the balance of any small business pool with a written down value of less than $20,000 and get an immediate deduction. Contact us if you need any help with financing purchases or determining what may be eligible.
- Pay the June Quarter Superannuation
If paid on time, your superannuation contributions are tax deductible. If you bring your 9.5% superannuation forward a month and pay it now, you’ll be able to claim the deduction this financial year end. It’s also important to maximise your superannuation contributions and contribute as much as you can into your super fund. There are limits to how much you can contribute before paying extra tax and penalties so seek advice from your financial planner to ensure you receive the maximum benefit.
- Employee Bonuses
Bonuses to employees are deductible when the business has committed to paying them and are not subject to any discretion.
- Capital Gains Tax
Minimising your capital gains tax is often about timing. Ensure the asset has been owned for at least 12 months. This is a complex issue with great potential savings so seek advice before undertaking any actions so that you have a full understanding of the consequences of the transactions and any concessions that may be available.
- Make Prepayments
If you can afford it, make prepayments for as many things as you can. Businesses are entitled to a deduction for prepayments made for greater than $1,000 as long as the eligible service period is less than 12 months. For example, you may consider prepaying a portion of rent or interest on borrowings. Prepayments under $1,000 are deductible regardless of the service duration.
If you think some of these strategies may be applicable to your business, the time to act is now. Contact us if you have any questions or require any assistance.