We have compiled a brief overview of things to do in the coming week to ensure that your tax affairs are structured correctly.
Write off bad debts before June 30 in order to be able to claim a tax deduction
Unfortunately, there will be times that a client does not pay you for work that has been completed. A small consolation can be found in the fact that bad debts are tax deductible, if the proper steps are taken.
These steps include being formally written off in your financial records before June 30 and it may also be necessary for you to provide the ATO with proof that you have taken reasonable steps to recover the amount.
Buy and install that equipment you need ahead of June 30 to claim accelerated depreciation
Businesses that are considering buying new equipment in the coming months should consider bringing forward the asset purchase for the deprecation to be included in this year’s tax deductions to offset their 2017 tax bill.
Businesses that invest in new tools or machinery will receive an immediate tax deduction for any individual assets under $20,000. The $20,000 limit can be applied to as many items as they wish. This limit applies until 30 June 2018.
Assets that exceed the $20,000 limit will be added to the entity’s small business pool and depreciated at 15 per cent in the first income year and 30 per cent each income year thereafter.
Pay FY17 Q4 Superannuation Contributions before 25th June for employees and yourself
Self-employed Australians can claim a tax deduction for contributions made to an eligible superannuation fund. However in FY17 taxpayers who are both employees and self-employed may only claim super contributions as a tax deduction where they have derived less than 10% of their assessable income from employment. These contributions are considered to be part of your concessional contributions cap.
For the FY17 year the general concessional contributions cap is $30,000 (for those aged 49 years or younger on 30 June 2017), while the special concessional contribution cap for older Australians is $35,000 (for those aged 50 years or older as at 30 June 2017). For the FY18 tax year, the concessional contributions cap is $25,000 for all age groups.
To help ensure that yours and your employee contributions are tax deductible in FY17 (not FY18) we recommend that the latest you transfer the money to the various super funds is the 25th June 2017.
Do you need to do a stocktake?
Small businesses can opt out of doing an end of year stocktake (which can be expensive) if the value of their trading stock has not gone up or down by more than $5000 in the past financial year. However, we advise that the end of year stock take is a great management tool for checking the accuracy of reporting systems and identifying issues such as fraud.