10 ways to HELP reduce your tax bill*
- Concessional superannuation cap. For people aged 49 years or over on 30 June 2014, the concessional superannuation cap (the money you can put into super before tax) is $35,000 per year, and $30,000 for those under 49. If you go over this limit, you’ll pay more tax, so I would consider putting in as much as feasible under that.
- Employee superannuation payments. It’s a good idea to ensure your employee superannuation payments have cleared your business bank account by 30 June.
- Asset depreciation. If your business turns over less than $2 million, depreciating assets (including motor vehicles) valued at less than $1,000 will be immediately deductible, and assets valued at more than $1,000 will be depreciated in one pool at a rate of 15 per cent in the first year, and 30 per cent in future years.
- Tools of trade / FBT exempt items. The purchase of Tools of Trade and other FBT exempt items for business owners and employees can be an effective way to buy equipment with a tax benefit. Items include handheld/portable tools of trade, computer software, notebook computers, personal electronic organisers, digital cameras, briefcases, protective clothing, and mobile phones. I’d recommend trying to get these items before 30 June, if you can.
- Defer income. Where practical, I’d recommend considering deferring further invoices and/or receiving cash/debtor payments until after 30 June. This will defer the tax on this income.
- Bring forward expenses. I would think about purchasing consumable items (e.g. stationery, printing, office and computer supplies) before 30 June. You can claim back on these on your tax return.
- Motor vehicle log book. It’s a good idea to keep an accurate and complete Motor Vehicle Log Book for at least 12 weeks (start date must be on or before 30 June). I also make a record of my odometer reading at 30 June, and keep all receipts/invoices for motor vehicle expenses throughout the year.
- Year end stock take / work in progress. If applicable, prepare a detailed stock take or work in progress listing as at 30 June. Once this is complete, I’d think about reviewing my listing and writing off any obsolete or worthless stock items.
- Write-off bad debts. I also think it’s wise to write off all Bad Debts before 30 June, with minutes of a directors’ meeting listing each bad debt as evidence these amounts were written off before year-end.
- Investment property depreciation. If you own a rental property, consider getting a Property Depreciation Report, so you can claim the maximum amount of depreciation and building write-off deductions.
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* Adapted from 2015 Business Tax Planning Strategies, ChangeGPS