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Business Tax Tips – 14 End of Financial Year 2017 tips to PREPARE for 30 June! Time to ACT NOW!

Business Tax Tips – 14 End of Financial Year 2016 tips to PREPARE for 30 June! Time to ACT NOW!

14 End of Financial Year 2016 tips to PREPARE for 30 June! Time to ACT NOW!

Time to plan for a good finish for EOFY and here are 14 tips to get started and prepare for 30 June.

1. Consider the ideal timing for asset sales

If you are thinking of selling a profitable asset this financial year, but are likely to earn a lower income in the next year, it may be worth postponing the sale until after 30 June; however, if you expect an income windfall or higher from 1 July, it may be worth bringing the sale forward. As always, your decisions depends on your expectations for future asset prices, so don’t postpone a sale for tax purposes if you are expecting your investment to fall in value! Ask your Tax advisor.

2. Delay sales invoicing if in profit

Most businesses are taxed on income when it is invoiced (accrual). Some small businesses may be taxed only when income is received (cash basis). Income from construction contracts is generally taxed when progress payments are invoiced or received. If you are making a good profit (which is good if you want to sell) and want to reduce business tax, it may help to delay invoicing the June work until July, after 30 June – talk to your tax advisor for your situation.

3. Accounts receivable – write off by 30 June

If you have clients that have closed or all manner of collection has failed – sometimes it is best to move on and write off. Keep looking for better clients!

4. Spouse and family wages

Paying family must be reasonable and legitimate for work performed.

5. Super liabilities

Employer and/or self-employed superannuation contributions must be paid to, and received by, the super fund before 30 June and must be within the contributions cap ($35,000 for individuals aged 49 or over on 30 June 2016, otherwise $30,000)

6. Depreciation – Accelerated Write off – up to $20,000

The accelerated depreciation write-off for assets up to $20,000 acquired by small businesses was announced in the May 2015 budget and is available to June 30, 2017. The write off threshold was previously $1,000 and the concession only applies to businesses in 2016/17 with an aggregate annual turnover of less than $2 million. As a boost for small businesses, the Government will extend access to a number of small business tax concessions by increasing the annual turnover eligibility threshold from $2m to $10m. These measures will apply from July 1, 2016.

7. Pre-pay income protection premiums 

If you are a self-employed director or self-employed, income protection insurance provides peace of mind about the security of your income in the event you are unable to work due to illness or injury. Premiums for this insurance are generally tax deductible; prepaying your annual premium prior to 30 June will allow you to claim a full year of cover in advance as a tax deduction.

8. 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. 

9. 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.

10. 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 (2017 now abolished), and be comfortable having your contribution preserved in super until you meet a condition of release (eg retirement decision).

11. 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%.

12. Review your portfolio

Review your portfolio and consider a strategic re-allocation of your investments. Consider portfolio allocations – is your portfolio heavily over- or underweight in specific industry sectors or stocks? Are you continuing to carry stocks that have exceeded your price targets or continue to under-perform – this may be an opportunity to re-balance. If you have an SMSF, now is the time to ensure your fund is invested in line with your documented investment strategy – your auditor will be confirming this after 1 July.

13. Offset capital gains with capital losses 

Generally, if you have incurred capital losses on your investments, you are able to offset these capital losses against any capital gains you have made. You can also use losses you have carried forward from previous years. Remember, income losses can only be offset against income; capital losses can only be offset against capital gains.

14. Best tip of all

Get advice specific to your business and situation that considers your personal position – both go together!

If you need a referral, call me – 0407 361 596 – plan NOW don’t delay!

Need help? Not sure? Call for FREE 30min advice / strategy session today!

Call 0407 361 596 Aust and also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!


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Business Tax Tips – 3 New Rules – Better asset deductions, motor vehicle and simplified pooling

Better asset deductions, motor vehicle and simplified pooling

3 New Rues – Better asset deductions, motor vehicle and simplified pooling

Are you aware of the new ATO rules for business asset deductions, motor vehicle accelerated deductions, and simplified pooling that are current in the 2012-2013 income year?

1.     Higher Asset write-off Threshold – $6500

Most depreciating assets up to $6500 can be FULLY claimed as an expense deduction against income (write-off), which is up from the $1000. The Australian Tax Office (ATO) gives an example – A camera is purchased $5900 and a high resolution printer $4,500. Both are fully deductible as expense in 2012-2013, used entirely for the business, as they come under the $6500 threshold.

2.     Accelerated deduction for Motor Vehicles

Purchase a motor vehicle for the business (or the proportion for business use) and claim an immediate $5000 deduction. The remainder of the cost can be claimed through the General Small Business Pool at 15% for the first year, then 30% for later years. An ATO example is purchasing a ute $37,080, used 50% for business. The calculation for depreciation in 2012-2013 is $5000 + 15% x ((50% x $37,080) – $5000) = $7,031. Note the first $5000 is also immediately claimable as well as the $7031.

3.     Simplified asset pooling

Assets over $6500 can be pooled under simplified depreciation rules and deducted at a single rate 30% each year, except for newly acquired assets – they are deducted at 15% (half the pool rate) in the first year. The former Long Life Pool (no longer exists) is rolled over as the opening balance of the general pool for 2012-2013 and depreciated at 30% instead of the former 5%.

Interestingly, the ATO site at Simplified Depreciation Rules is still dated 28 June 2012 and has the old $1000 threshold, but the new ATO site advertised on the bulletin that came with the latest BAS statements – has the latest new rules.

Tell us which will apply to your business and whether you can see a benefit for your business – comment now.

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Income Protection – Tax Deductible for the Business, is there GST and is it Taxable when Paid?

Income Protection – Tax Deductible for the Business, is there GST and is it taxable when paid?

Income Protection – Tax Deductible for the Business, is there GST and is it Taxable when Paid?

For many small to medium business it is crucial to take their central role as the main source of income seriously and protect it. Income protection insurance premiums are generally tax deductible for the business, but payments paid are taxable in the hands of the receiver when paid. There is NO GST on Income Protection premiums (nor on life insurance or private health premiums, as they are classed as financial services – GST is included in general insurances such as home and car insurance).

Income protection pays you a lump sum benefit of up to 75% of your gross income if you have become unable to work due to an illness or accident. It is to pay or provide a steady income every month so that you can focus more on the most important thing – your fast recovery.

Income protection can help you pay for many things including:

  • Mortgage and other debt repayments;
  • Basic household lifestyle;
  • Daily expenses, such as bills and food;
  • Rent or costs of maintenance costs.

As to how much income protection you need, depends on your current income – you can receive regular monthly payments of around 75 to 80 percent of your average salary before you became incapacitated, which should be enough to see you through until you can return to work. Another consideration is how long you want the benefits to be paid, which is unknown of course. You also need to consider the  (or company or business) you are entitled to, because after that, the income protection insurance can take over, and you want that to be as long as you can afford. So a quote on the payments (premiums) for different lengths of time is required. Income protection cover is usually only available from providers until you are aged 65, depending on the company.

Why not get a quote and know your options? It is FREE and there are no obligations you will be able to compare several offers and the premium prices. Call us and we can refer you to independent brokers in our trusted network who would be happy to assist you. Call today and be prepared! Ph 0407 361 596