Effective Tax Planning Strategies
With the end of the financial year fast approaching there are several approaches that businesses may effectively utilise to reduce their taxes.
- Pre-pay expenses
Expenses such as insurance, rent and subscriptions to professional associations for the coming year can be paid up to 12 months in advance. These pre-paid expenses can be deducted in the current tax year.
- $150,000 instant asset write-off
The $150,000 instant asset write-off allows the new and used business assets that you purchase to be instantly deducted from your assessable tax for small businesses.
- Postpone invoices
Where appropriate, identify which invoices for the current tax year can be deferred until the subsequent year.
- Contribute to your super
Take this opportunity to make additional contributions to your superannuation fund up to $25,000.
- Write-off Bad Debts
Assess your debtors and identify and write off any unrecoverable debts. Any bad debt will reduce your taxable income, irrespective of the year that they were invoiced.
- Using the right business or investment structures
The structure of your business or investment can have a significant impact on tax position. If your business/investment is generating significant income, please contact us so we can advise you a right structure.
- Trust Resolutions
The trustees of discretionary trusts are required to make a resolution on how the income from the trust is distributed to its beneficiaries before 30th June or last business day of the end of financial year.
If a valid resolution is not made by 30th June, Primary beneficiaries become entitled to the trust’s income, and are subject to tax. For any income that is derived, but not distributed by the trust, the trust will be assessed at the highest marginal tax rate on this income.
- Year-end Stocktake
Review your stock and write off any stock that is damaged or obsolete. Complete a stocktake and remember that stock can be valued at the cost, market, or replacement value.
- Vehicle Logbook
Make sure you have updated your vehicle logbook as you need to update it every four year for the continuing period of 12 weeks.
- ATO’s Audit Hotspot watchlist
Every year ATO target certain areas of items taxpayers claim. Some of the item’s claims are under ATO watchlist e.g. home office expenses, motor vehicle costs, or education expenses.
- Record Keeping
Keeping records of all your income and expenses reported ensures you can accurately deal with the ATO should they enquire or audited your tax return.
P (03) 9807 1344 and ask for Pasha Memon or Sohaib Ashraf.