With the end of financial year fast approaching it is time to consider the last minute income tax tips and strategies to reduce your tax burden.
Some possible strategies to implement prior to the 30th June 2016 include:
- Write off any bad debts
- Consider prepayment of expenses, including income protection insurance, rent and interest
- Trading stock valuations: As each item of trading stock can be valued for tax purposes, reviewing whether to use cost, market selling or replacement value of the obsolete stock value can bring forward deductions, or alternatively can increase taxable income if you have sufficient deductions for the year ending 30 June 2016
- Review asset register for obsolescence
- Pay compulsory superannuation prior to 30th June
- Defer invoicing until after 1 July 2016
- Pay Creditors before June 30
- Staff bonuses: you may be able to bring forward staff bonus provisions if the policies are approved before year-end and are made unconditional
(Please note that the appropriateness of these strategies will differ depending on whether you account on a cash or accrual basis for income tax purposes)
Small Business Entities (Revenue < $2 Million)
- Reduction of companies tax rates from 30% to 28.5%
- Continue of Instant Asset Write Off of $20,000 – Small business can immediately deduct assets costing less than $20,000 purchased for assets acquired after 7:30pm on 12 May 2015 until 30 June 2017. Therefore, you may wish to purchase assets costing less than $20,000 before 30 June 2016
- Water facilities – primary producers that incur capital expenditure on water facilities from 7:30pm, 12 May 2015 can deduct the whole amount in the income year in which the business incurred the expenditure
- Accelerated depreciation – primary producers that incur capital expenditure on fencing from 7:30pm, 12 May 2015 can deduct the whole amount in the income year in which the business incurred the expenditure
- Consideration of allowable stock writedowns for primary producers
The maximum concessional contributions that can be contributed to superannuation for the current year is:
- Aged 49 or older on 30 June 2015 – $35,000
- Under 49 on 30 June 2015 – $30,000
This applies to those contributions made by your employer or contributions where you have claimed a tax deduction. Please make sure that the contributions are made and received by 30 June.
If you would like to discuss any of the above or for assistance in implementing any of these measures please do not hesitate to contact the team at Stable Financial on (03) 9629 3023.