Year End Business Tax Planning Tips

Nearing the end of the tax year at 30 June, there are several things to consider and watch

  • Record Keeping – normally required to be retained for tax purposes for at least five years, but special requirements apply in some areas.  For example, in the case of capital gains tax and the substantiation rules, records have to be held for longer periods.
  • Stock on Hand – It’s not sufficient to simply make an estimate of your stock, or to take a guess.  Each year you need to include a value in your accounts of stock on hand and work-in-progress at 30 June. Closing stock can be valued at cost, replacement or market value or less if obsolete, but you have to document which method you use.
  • Personal Services Income –  designed to limit the level of deductions available to certain contractors whether they are operating as a sole trader or through a company, trust or partnership, and to also extend the PAYG withholding rules in such cases. If you meet certain specified tests such as the ‘results’ test will be treated as carrying on a personal services business and will be able claim a wider range of deductions.  But be aware of the ATO‘s strict approach to income retention and income splitting (with some exceptions such as for standard ‘mum and dad’ partnerships).
  • Superannuation – must ensure they have made sufficient superannuation contributions (9 per cent) for all employees on a quarterly basis throughout the financial year to avoid the risk of incurring a penalty under the Superannuation Guarantee Charge (SGC) regime.
  • Dividends and Interest  – Ensure that interest and dividends are returned by taxpayers, the Tax Office matches information provided in tax returns with information from external sources. And remember to put in your imputation credits. The best way to avoid trouble here is to include all such income in your return and retain supporting documents such as bank and company dividend statements.

To Be Continued

1 thought on “Year End Business Tax Planning Tips

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