Ten tips to minimise business tax
1. Review Debtors
Your income tax is payable on any invoices you've issued, even if you haven't been paid. Don't pay tax on any invoice you know won't ever get paid. Review the list of those who owe you money and write off those bad debts now.
2. Defer Income
If your cash flow allows, you may consider deferring some of your invoices until July. If the income was not invoiced this financial year, it can't be taxed this financial year.
3. Employee Superannuation Payments
To claim a deduction this financial year you need to ensure that your employee superannuation payments have CLEARED your business bank account by 30 June this year. For any last minute superannuation payments we recommend that you arrange for a bank cheque made payable to your employee super fund prior to 30 June.
4. Capital Gains Tax
Capital gains tax is a whole topic in itself with potential for great savings. Please seek our guidance. It is often about timing. Ensure the asset has been owned for at least 12 months. If you already have a capital gain, are there any investments making a loss that you can sell? In addition, if practical, arrange for the receipt of investment income (e.g. interest on term deposits) to occur after 30 June this year.
If your business is a small business entity (turnover less than $2 million) the following tax concessions apply:
- depreciating assets valued at less than $1000 will be immediately deductible
- depreciating assets valued at more than $1000 will be depreciated in one pool at a rate of 15% in the first year and 30% in future years.
6. Repairs & Maintenance
Make payments for repairs and maintenance (business, rental property, employment) BEFORE 30 June this year.
7. Review Stock Levels
The value of your closing stock directly affects your business profit because the higher your stock value, the higher your profit and therefore the higher your tax. Review and identify obsolete or old stock and scrap it or re-value it to its correct value. Individual items of stock can be valued at cost, market value, or replacement value.
8. Tools of the Trade / FBT Exempt Items
The purchase of Tools of Trade and other FBT exempt items for business owners and employees can be an effective way to buy equipment with a tax benefit. If structured correctly the Employer will be entitled to a tax deduction for the reimbursement payment to the employee (for the equipment cost), claim any GST input credit and the employee's salary package will only be reduced by the GST-exclusive cost of the items purchased. You should buy these items before 30 June this year.
9. Investment Property Depreciation
If you own a rental property and haven't already done so, arrange for the preparation of a Property Depreciation Report to allow you to claim the maximum amount of depreciation and building write-off deductions on your rental property.
10. Talk to our Business Advisors
Our team are skilled in business advisory, contact us today to ensure you structure your business to achieve the best outcome for you personally. Ph 03 8850 3333 or email email@example.com.