As Benjamin Franklin once said “nothing can be said to be certain, except death and taxes”.
Despite the truth of that statement there are steps you can take now to ensure you don’t pay more tax then necessary. Let’s explore some simple steps you can take before 30 June to minimise your tax bill for the 2018 financial year.
$20,000 instant asset write off
If you are a business with turnover less than $10 million you can claim an immediate tax deduction for assets costing less than $20,000. This generous government concession finishes on 30 June 2018. If your business is considering the purchase of new capital assets under this threshold it may be beneficial to bring forward this expenditure to access this concession.
You can help provide for your retirement, have your investment returns taxed in a concession environment and obtain a tax deduction. The superannuation framework is complex and ever changing so please see your advisor if you are considering a super contribution.
Pay off non-tax deductible debt first
Always clear non-deductible debt first and until then see if you can pay interest only on your tax deductible loans (eg. investment property and business loans) Also, don’t mix investment and personal debt – this can reduce you deductible interest and create a headache for your accountant at tax time who will need to calculate complex interest apportionment calculations.
Beware of potential Fringe Benefits Tax (FBT) exposure.
FBT is applied at the highest marginal tax rate (46.5%). This should be avoided where possible. Be mindful of benefits like staff entertainment including Christmas parties and vehicle benefits including utes where the private use is NOT minor and infrequent.
Write off obsolete stock.
Write off bad debts.
Prepay or bring forward deductible expenses.
If you are an investor or a small business (ie business turnover less than $10 million) you can claim an immediate tax deduction for prepaid investment and business expenditure. You will be eligible for an immediate deduction for prepayments of up to 12 months of expenditure. For example, prepay 12 months of interest on your investment or business loan. You could also prepay deductible expenses such a land rates or telephone and electricity bills. You could consider brining forward expenditure such as repairs and maintenance or the purchase of business consumables such as farm fertiliser, bulk fuel, workshop spare parts and stationery.
Try to defer income until the new financial year. You can do this by planning for longer term deposit maturity dates, deferring the sale of investments or legitimately deferring income by delaying the issue of business invoices until after 30 June.
Pay staff super contributions early
June quarter superannuation contributions for your staff are not due until 28 July. Superannuation contributions are not deductible until paid. Depending on your business payroll cycle you may be able to calculate and pay these prior to 30 June to ensure you have the deduction in the current financial year.
Please note that this year 30 June falls on a Saturday so please ensure you leave sufficient time to get all your plans in place by Friday the 29th of June.
If you would like to talk to one of our advisors about whether you would benefit from any of these tax saving strategies, please don’t hesitate to get in touch.
Disclaimer – The information in this article is general information only and should not be taken as constituting professional advice. You should consider seeking independent advice to check how this information relates to your unique circumstances. Atticus is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly in this article.