Now is the time to review all your records to ensure you maximise your tax deductions in this year’s tax return. Here are our top tax planning tips for individuals and businesses.
The tax return process is made much more efficient if you have all your documentary evidence organised and available by the time we start to talk to you about your 2017/18 return.
Remember: June 30 falls on a Sunday this year so take this into account when processing early.
Home office: If you work from home, you can claim deductions for expenses such as power and phone costs. There is also a set rate per hour method for claiming some of the home office expenses, which may make it easier to calculate. Occupancy expenses such as rent and mortgage depreciation can also be claimed in some circumstances where you operate a business from home.
Depositing super contributions: Deposit any member contributions early in the week beginning Monday 25 June to ensure they are recorded by your super fund by Friday 29 June 2018.
Capital losses: Consider selling loss incurring assets such as shares to help offset your tax liability from any capital gains on other assets.
Trust resolutions: If you are a trustee of a discretionary trust, you must document, before 30 June 2018, how the trust income will be distributed among beneficiaries.
Self-education expenses: If you are under taking self-education and intend to claim expenses such as course fees, books etc. your study must relate to your current work situation.
Pay quarterly super: Super Guarantee contributions must be paid before 30 June to qualify for a tax deduction in the 2017/18 financial year. You might consider bringing forward the June quarter contribution payments. We recommend allowing plenty of time for it to reach the super funds.
Bad debts: Review all your bad debtors. Write-off all those you think are unlikely to pay to enable a tax deduction this year. We recommend recording this in the minutes of the business after ensuring that all reasonable steps have been taken to recover the debt.
Prepaid expenses: Prepaying certain expenses such as rent, repairs and office supplies before year end can reduce your current year tax liability. If payments are due early next financial year, a pre-payment may entitle you to the tax benefit much earlier. The rules differ depending on the type of entity so please call us if you would like more clarification.
Stocktake: Trading stock should be reviewed before 30 June, either by a physical count or from a perpetual stock record system. Small Business Entities can be exempt from conducting a yearly stock take if the value of stock has moved by less than $5,000 during the year. Tax is paid on the value of stock at the end of the financial year so consider selling or disposing of slow moving stock so that it is not included in the count.
Franking credits: If you are planning on paying dividends out to shareholders before the end of the year, it is worth reviewing the company’s franking account to ensure that the company has paid sufficient tax to enable the dividends to be fully franked. This may mean paying ahead of scheduled payments in an arrangement with the ATO. For assistance with calculating your franking account balance, please contact us.