As we tick down another financial year (aren’t they just flying by?!), it’s a good time for businesses to consider what advantages may be available, or what traps to avoid. Here’s a few to consider:
- For small businesses, you may be eligible for the $20,000 immediate write-off on assets. For more information, read here.
- If you are under a Division 7A loan agreement, consider the timing of your dividend.
- Small businesses may also be eligible to prepay certain expenses and bring forward the deduction under the 12-month prepayment rule. Non-SBE can prepay up to $1,000 of expenses (unless under a contract of service or the expense is required by law)
- Review your debtors and write off your bad debts. This is a little more involved than a journal entry and is subject to business loss rules, but can bring forward a deduction that you may otherwise be carrying until a future time.
- Trading stock – it’s a little known fact, but you can change your method of valuing trading stock which may help some businesses around tax time.
- If possible, you may be able to defer income by timing your invoices carefully – however make sure you consider the income derivation rules.
- Superannuation is deductible when it is paid, so if you can get your employee’s superannuation into their account for the June quarter, you can claim the deduction in the 2015 year.
- If you are an investor, it may be a good time to review what gains and losses you have not only made, but are currently unrealised.
- Don’t forget that this year the budget repair levy of 2% on income over $180,000 is applicable, and the medicare levy has gone up from 1.5% to 2%.
- Also keep in mind that the recent Federal Budget announced tax rate changes from the 1st July 2015 for small businesses – this may influence your decisions around the timing of income and deductions.
Make sure you contact us if you have any questions and if you’d like to discuss any of the above. Otherwise, Happy New Year!
Contributed by David Gow