The end of the financial year is approaching. The following is a list of some of the issues you may wish to consider.
Small Business Tax Saving Strategies
In order to minimise liability to taxation for the current year, the general strategy options for most taxpayers are as follows:
- Delay deriving assessable income.
- Pay wages before 30 June.
- Make superannuation contribution payments for the June quarter before 30 June.
- Consider instant asset write off for assets costing less than $20,000 (exc. GST).
- Pre-pay expenses before they are due (e.g. Insurance premiums, membership of organisations, travel, advertising and interest).
- Bring forward repairs and maintenance by 30 June.
- Write off bad debts.
- Preparation and reconciliation of Employee PAYG Payment Summaries.
- Preparation of Taxable Payment Annual Report (building and construction industry only).
- Preparation of Stock Take Report as at 30 June 2018.
- If you use a car in producing your income you may need to:
- Record Motor Vehicle Odometer readings at 30 June.
- Prepare a 12 week log book if your existing one is older than 5 years.
- If your Directors Loan Account in your business is in debit, you must either:
- Fully repay the loan before the earlier of the due date for lodgment and the date of the lodgment of the lender’s tax return for the year of income or
- Have Division 7A loan agreement in place.
- If you are a trustee and you make beneficiaries of a trust entitled to trust income by way of a resolution:
- The trustees must make the resolution and have evidence of this by 30 June 2017 at the latest.
- The trustee must lodge a TFN report with the ATO by the last day of the month following the end of the quarter where the distribution is either paid or resolved to be paid to a new beneficiary for the trust.
Personal Super Contribution
An employee generally could not claim a tax deduction for any personal super contributions made before 1 July 2017. From 1 July 2017, most people, regardless of their employment arrangement, will be able to claim a full deduction for personal super contributions they make to their super until they turn 75.
You may be eligible to claim a tax deduction for your personal super contributions up to $25,000. If you wish to claim a tax deduction for personal contributions, you must complete and lodge a ‘Notice of intention to claim a tax deduction’ with your super fund and have this notice acknowledged (in writing) by your fund.
Please note that the contributions that you claim as a deduction will count towards your concessional contributions cap ($25,000, including superannuation guarantee, additional employer contributions and any salary sacrificed contributions). If you exceed your cap, you will have to pay extra tax and any excess concessional contributions will count towards your non-concessional contributions cap.
If you’re a low or middle-income earner (with taxable income less than $51,813) and make personal (after-tax) contributions to your super fund, the government also makes a contribution based on 50% of your contributions up to a maximum amount of $500.