We are now only weeks away from the June 30th EOFY, or as financial professionals like to refer to as crunch time. Funder & Associates has put together some Tax Tips to help your tax deductions boost your refund and avoid the crunch.
Tax Planning Tips
- Cash/Accruals: For best results, always use cash. Accruals give you a higher taxable amount. If possible, defer the accruals to the following year.
- Remove income you have banked but not earned. It will cut the taxable income down.
- Interest: attempt to have the investments mature close to 30th June because it is only when you receive the income that you are taxed.
- Bad debts should be written off prior to 30th June to reduce accruals/ taxable income. Most small business accountants can help you with this.
- Scrap all assets in the Balance Sheets and depreciation schedule to zero- increasing the deductions substantially.
- Stock: slow moving or obsolete stock should reduce in value or zeroed out to nil if need be.
- Motor Vehicle: services and repairs to vehicles for business purposes – accelerating the deduction for a full 12 months.
- Superannuation: compulsory 9.5% super payments must be actually paid – otherwise no deduction can be claimed.
- You can claim for personal deductions for superannuation up to the limit of $25,000 per annum. Previously you could only do this if your salary and wages was less than 10% of your total income.
- Your tax position has improved considerately if you meet the small business capital gain concessions tests. Most accounting firms in Brisbane can lower your tax substantially or to nil in some circumstances.
- CGT discount is non operative for assets held for less than 12 months. If more than 12 months, a 50% discount is available.
- Small business CGT concessions allow you to roll the gains in superannuation.
- Tax losses: check the carry forward tax losses. This will bring down your company taxable income or to Nil in some cases.
- Loans/ Dividends: companies are allowed to make loan to directors/ shareholders provided they document the loans and have a verifiable loan repayment program. Otherwise, they are treated as unfranked dividends.
- Trusts: if the level of income from your business, investments is sufficient, it is advisable to use a trust to split the income between other members of the family whose income is lower than yours.
A word of warning: if income is from one service- personal exertion one cannot split the income up.
- Contribution Caps: The maximum amount for concessional contributions for all ages is now $25,000 and the non-concessional $100,000 per annum but can bring forward 3 years if need be, but then you wait another 3 years before you can repeat the process.
If you need further assistance with some of the Top Tax Tips for EOFY 2018, please do not hesitate to contact Funder & Associates.