All business owners should review their tax position at the end of the income year and evaluate any year-end strategies that may be available to legitimately reduce their tax.
Action points this week to review:
- New asset purchases under $20,000 (Excluding GST): Businesses with under $2m turnover (SBE’s) that invest in plant and equipment (cars, computers etc.) will receive an immediate tax deduction for any individual assets under $20,000 from now until 30 June 2017. The $20,000 limit can be applied to as many separate items as they wish. This tax break is only ideal if you were planning to purchase the assets anyway at a later time.
- Accelerate Depreciation: Assets that exceed the $20,000 limit for SBE’s will be added to the entity’s small business pool and depreciated at a full 15 per cent in the first income year no matter if purchased the last day of the tax year, and 30 per cent each income year thereafter.
- Superannuation: For any superannuation expense to be deductible it must be paid before 30 June 2016. We recommend that employers pay their Employee Super at latest on the 22/06/2016 if using a clearing house to ensure no issues. With regards to personal superannuation contributions ($30,000 or $35,000 if aged 49 years or over on 30 June 2015) the rules are complex and we urge to call our office immediately to clarify the best course of action for your individual circumstances.
- Bad Debts: Review your debtors and write off bad debts before 30 June 2016 in order to be tax deductible in that year.
- Prepayment strategies: SBE taxpayers making prepayments before 1 July 2016 can choose to claim a full deduction in the year of payment where they cover a period of no more than 12 months (ending before 1 July 2017). The kinds of expenses that may be prepaid include:
- Rent on business premises or equipment.
- Lease payments on business items such as cars and office equipment.
- Interest – check with your financier to determine if it’s possible to prepay up to 12 months interest in advance.
- Business trips.
- Training courses that run on or after 1 July 2016.
- Business subscriptions.
Please call Trinity Accountants for a free end of year business tax consultation. Trinity Accountants specialise in small business and are a Xero certified silver partner.