The end of the financial year is almost here again. We try to plan to reduce tax all year long, however 30 June presents us with some opportunities and it’s a critical deadline to make sure we minimise tax for the year.
Here are some key opportunities to make sure you don’t miss out:
You need to write these off prior to 30 June to be eligible for a deduction. Make sure you go through your debtors (people who owe you money) list and write off anything that is not collectible.
A lot of businesses do not carry large amounts of trading stock (items for resale). If you meet the ATO small business entity criteria, and the difference between your stock on hand as at 1 July 2014 and your reasonable estimate of stock on hand as at 30 June 2015 is no more than $5,000 you are not required to complete a stocktake.
Bring forward expenses
Do some forward planning and look at expenditure for the next few months. There may be some expenses that you are going to incur but could be better brought forward. Consider items like training, repairs and maintenance or prepaying some interest.
Small business entity depreciation concessions
If you qualify as a small business, you are able to obtain an immediate deduction for asset purchases under $1,000. And if the legislation is passed, from 12 May 2015, you are able to obtain an immediate deduction for asset purchases under $20,000 (including installation costs and excluding GST).
You need to make sure that any loans from your company are set up properly or repaid by the end of the financial year. Otherwise you could end up with a deemed dividend and some unexpected tax.
If you operate a trust you need to make sure that the trustee decides how the profit will be distributed prior to 30 June. This decision should be recorded in a minute and signed before year end. This is an ongoing area of Australian Taxation Office compliance.
The minimum super you must pay is 9.5% of each eligible employee's 'ordinary time earnings'. To claim a contribution for the June quarter superannuation, you will need to pay the contribution before 30 June to claim it in the 2015 year.
Like employee super, you also need to pay your personal super contributions prior to 30 June to get a deduction this year. Just remember there is limit of $30,000, however for individuals who are 49 years old or over on 30 June 2014 the limit is $35,000.
Minimum Pension Payments
Ensure that if your super fund is in pension phase, that you have withdrawn the minimum pension amounts so you retain the tax free status of the fund.
If your personal adjusted taxable income, which includes reportable fringe benefits, reportable superannuation contributions and investment losses, is less than $34,488, and 10% or more of your income is from eligible employment-related activities, you may be eligible for the full co-contribution, at the rate of $0.50 for every dollar you contribute, up to a maximum of $500 per year. The co-contribution phases out once your taxable income is over $49,488. If you contribute a lump sum of $1,000 the maximum co-contribution from the government will be $500.
For more information about this article, please contact your nearest RSM Office