Year End Tax Planning Review
With the end of financial year fast approaching it is not too late to save some further tax for 2016. If you haven’t already, here are a few key items that are worth reviewing before 30 June 2016:
If you are on an accrual basis, you will be paying tax on the invoices you issue for the financial year, regardless if paid or not. Review your debtors list prior to 30 June 2016 and write off those invoices you know won’t be paid to avoid paying tax this year on money you will not likely ever receive.
Likewise, another method to reduce income for the year is to consider deferring some of your June 2016 invoices until July 2016. You need to ensure this won’t adversely affect your cashflow however as it may interrupt your customers payment terms. Please contact us should you wish to discuss.
The value of your closing stock is a direct contributor to the profit of your business, with the higher the stock value, the higher your profit. Ensure you review your stock listing for any obsolete stock that can be written-off, or at the very least be re-valued. Note that stock can be valued at cost, market value or replacement value – whichever is going to give you the best tax result.
A small business taxpayer (one who has aggregated turnover under $2 million) can immediately write off the cost of purchased assets (new or 2nd hand), including motor vehicles, costing up to $20,000. If the assets cost more than $20,000, they can be placed into a pool and depreciated at 15% for the first year, and 30% each year after that.
If you are therefore planning an asset purchase, consider making that purchase prior to 30 June.
Through a review of your depreciation schedule, you can determine if there are any benefits in scrapping any fixed assets to obtain the tax write off prior to 30 June 2016.
JUNE SUPERANNUATION GUARANTEE CHARGE
Superannuation is only deductible when paid. Pay your June SGC prior to 30 June instead of 28 July and receive the deduction this financial year.
If part of your plan is to maximise your superannuation, be sure to make those contributions prior to 30 June 2016. If you are unsure how much you can contribute, please contact us to discuss.
Ensure any promised donations are made prior to 30 June 2016 to receive the deduction this year. Also ensure that they are being made to a deductible gift recipient, meaning the donation is in fact tax deductible. Also – keep the receipt!
If your turnover is less than $2 million consider any prepayments prior to 30 June 2016. Small business taxpayers are entitled to a deduction where the relevant services will be wholly provided within 12 months of the date of expenditure, such as rent, advertising etc.
INTEREST ON INVESTMENT LOANS
Those who have borrowed money for a non-business investment (eg. Rental property) can check with their lenders to see if they can prepay interest prior to 30 June 2016.
These are just a few points to consider prior to 30 June 2016. If you would like to discuss further, please contact us.
Now is also an ideal time to talk to us about development strategies for your business, particularly relating to:
- a business health check
- cashflow management, including:
- work in progress reviews
- business plan development for 2016/17
- budgets & cashflow forecasts for 2016/17
- leadership review
- succession planning
- buying a business - if you’re contemplating expanding your business operations
- selling a business - if you’re planning on selling your business
- bank’s/lender’s review
- gross profit analysis review
- sales targets and calculations of “what ifs”
- accessing government grants
If you’d like us to undertake a business review on your business, please contact us as soon as possible.