1. Get more from your director’s bonus
If you are expecting a pre-30 June bonus, you may be able to sacrifice your pre-tax salary or bonus into super rather than receive it as cash. As with the deductible contributions, this could reduce tax on your salary or bonus by up to 34%, and will allow you to take advantage of the contribution caps that apply in this financial year. Once your money is invested in super, the tax going in is only 15% and also, tax on earnings is capped at 15%, which may compare favourably to investments held in your own name.
2. Pay quarterly/monthly super
Super Guarantee contributions must be paid before 30 June to qualify for a tax deduction in the 2017/18 financial year. You might consider bringing forward the June quarter contribution payments. We recommend allowing plenty of time for it to reach the super funds (5-14 days some funds require).
3. Bad debt review
Review all your bad debtors. Write-off all those you think are unlikely to pay to enable a tax deduction this year. We recommend recording this in the minutes of the business after ensuring that all reasonable steps have been taken to recover the debt.
4. Prepay expenses
Prepaying certain expenses such as rent, repairs and office supplies before year end can reduce your current year tax liability. If payments are due early next financial year, a pre-payment may entitle you to the tax benefit much earlier. The rules differ depending on the type of entity so please call your tax agent, if you would like more clarification.
Trading stock should be reviewed before 30 June, either by a physical count or from a perpetual stock record system. Small Business Entities can be exempt from conducting a yearly stock take if the value of stock has moved by less than $5,000 during the year. Tax is paid on the value of stock at the end of the financial year so consider selling or disposing of slow moving stock so that it is not included in the count.
6. Franking credits
If you are planning on paying dividends out to shareholders before the end of the year, it is worth reviewing the company’s franking account to ensure that the company has paid sufficient tax to enable the dividends to be fully franked. This may mean paying ahead of scheduled payments in an arrangement with the ATO. For assistance with calculating your franking account balance, please talk to your tax agent.
A. Get a super top up from the Government
If you earn $35,454 – $51,021 pa, of which at least 10% is from employment or a business, and make a personal after-tax super contribution, you could qualify for a Government co-contribution of up to $500.
B. Boost your partner’s super and reduce your tax
If you have a spouse who earns less than $10,800 pa, consider making an after-tax super contribution on their behalf, and you could receive a tax offset of up to $540.
C. Use super to manage Capital Gains Tax
If you make a capital gain on the sale of an asset this financial year and earn less than 10% of your income from eligible employment, you may be able to claim a tax deduction for a contribution to superannuation, which could reduce or offset your capital gain. You will need to be eligible to contribute to superannuation (which means you are under the age of 65, or under 75 and meeting the work test), and be comfortable having your contribution preserved in super until you meet a condition of release (eg retirement).
D. Make tax deductible super contributions
If you earn less than 10% of your income from eligible employment (eg you are self-employed or not employed), you are generally able to claim a tax deduction for personal contributions to superannuation. As with super, you will need to be eligible to contribute to superannuation (which means you are under the age of 65, or under 75 and meeting the work test), and be comfortable having your contribution preserved in super until you meet a condition of release (eg retirement). If you claim a deduction for it, the contribution you make will be taxed at 15% in your super fund, so your tax saving will be the difference between your marginal rate and 15% – which could be up to 34%.
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