It is always recommended to start planning for your tax affairs with the beginning of the financial year through to its end. However beneficiary of last minute’s offer may be able to make good savings by taking the opportunity.
Business taxpayers are now in the last minutes to the end of financial year, they can apply the following few tax planning tips during those the 35 days left, to minimise their tax liabilities for the current year ending on 30 june.
However, as tax planning strategy is not a one-fit-all solution, therefore, the effectiveness and benefits of these tips may differ between taxpayers depending on type, nature and size of their business.
1- Minimise assessable income
This extremely depends on the accounting method the business is using (whether cash or accrual basis).
1.1 accrual basis business – can reduce assessable income by deferring the recognition of income until after 30 june, it is also recommended to postpone the issuing of invoices for incomplete or work in-progress to the new financial year.
1.2 cash basis business – can reduce assessable income by deferring the collection of certain income such as rental income.
2. Maximise deductible expenses –
This relatively depends on the size of business. Small business entity (sbe) has access to various tax concessions and is allowed to bring forward deductible expenses in different ways including the following:
2.1 prepayments – sbe can pre-pay next year’s expenses prior to jun 30 this year, and can bring them forward as tax deductions for the current financial year. These expenses may include salaries & wages, bonuses, commissions, superannuation, memberships, rent, stationery, office supplies, utilities, rates, insurances, accounting & auditing fees, motor vehicles expenses, etc…
2.2 superannuation contribution – employers’ compulsory 9.5% super guarantee can be pre-paid and tax-deducted this year provided it is received by the super fund by june 30.
2.3 instant asset write-off – sbe asset write-off has been extended to businesses with aggregated turnover of less than 500 million which can claim a deduction up to $150,000 for the business portion of each asset purchased and first used or installed ready for use during the period from 12th march 2020 to 30th june 2020.
2.4 repair and maintenance – cost of repair and maintenance for business’ property plant and equipment can be spent prior to june 30 and brought forward as tax deductible for the current year.
2.5 write-off bad debts and obsolete assets – business entities using accrual basis of accounting can write-off bad debts, obsolete stock and scrapped plant and equipment prior to june 30 and then claim them as tax deductions for the current year.
If you require tax planning advice to minimise your tax liability, please contact us on 0435386800 for further information.