Tax Time Tips!
It’s seems to come around all too quickly each year, and yes it is upon us once again – tax time! Get excited, sharpen those pencils and get organised. Here are some tips to help you get the most out of tax time :
- Consider deferring income. Is it possible for you to put off raising those invoices until the first couple of days in July? Rather than in June?
- Think of using the same principle when it comes to expenses. Is it possible to bring them forward? Could you ask your suppliers to invoice you before the end of June (however, if they are looking to defer their income they may not want to come to the party on this one! )
- Are you planning on paying end of financial year bonuses to your employees? If so ensure that these are declared before June 30, even if you don’t pay them until July. That way they are deductible in the current financial year.
- Bad debts – do you have debtors which you know are never going to pay their accounts? Debtors that have disappeared never to be heard of again? Now is a great time to go over your debtors list and write off those that are bad. Just make sure that you have some documentation on how you have tried to recover the debts, such as letters and phone notes
- If you are a small business (turnover of less than $2 mil), there are some tax concessions that you can take advantage of. Firstly, consider pre-paying some expenses as you are able to claim an immediate deduction for the cost, as long as the service being provided doesn’t last longer than 12 months. One example is rent. You can pay up to 12 months in advance and claim a deduction for the entire amount paid. Secondly, take advantage of the increased amount for the immediate write off of assets. The threshold has increased to $6,500, so any item you purchase under this amount is immediately deductible. This is a large increase from the previous $1,000. Another one to consider is the $5,000 deduction on the purchase of a motor vehicle. If you need a new car for the business, now may be the time to consider it while these deductions are available. After all, with a Federal election coming up who knows if they will still be available next time we have this chat!
- Review your asset register. Is there anything that is no longer in use, obsolete, or been scrapped? If so write it off. You may be entitled to a deduction for the remaining written down value.
- Do you hold stock on hand? Are you carrying obsolete stock which can be written off?
And for the individual taxpayer:
- Check the ATO website to see if there is a guide specific to your occupation outlining the items that you may be able to claim.
- Keep receipts!! Now I don’t recommend the shoebox style of filing, but it is better than nothing. Get yourself some new shoes in July so you have a shoebox ready, and every time you get a receipt for something work related, just pop it in the box! Just remember to sort and summarise before you see your accountant – or alternatively, turn up with said shoebox, but ensure you also have chocolate and wine in hand!
- If you have investments in shares, have you made a capital gain during the year? Do you hold shares in a loss position which you could sell before June 30 to crystallise a capital loss and thereby reduce your net gain?
- Do you hold an income protection insurance policy? Remember this policy may be tax deductible to you.
- Identify all your eligible rental property deductions. Especially when it comes to depreciation – have you had a depreciation report prepared by a quantity surveyor?
- Claim all your relevant non-work deductions such as tax agent fees and donations.