The end of financial year is fast approaching, which means it’s time to start thinking about your tax!
We have 14 tax saving tips to help you prepare and manage your Business’ financial accounts throughout the year.
1. What tax claims are the ATO targeting?
As tax time approaches, the ATO like to let Aussies know what is going to be on their watchlist for the year, so make sure you do your homework and see what’s on their hit list. You are likely to see things such as motor vehicle costs, home office and education write offs being examined.
2. Strategic tax planning with your accountant
Short and long term tax planning are two essential items that should be on your accountants agenda! Short term planning should look at anything you can do before financial year ends to minimise tax. Long term tax planning will go further and look at things like using your business structure to minimise tax and protect your family’s wealth as well as reviewing the types of structures to suit your investments over the long term.
3. Do you have the best tax structures?
It’s a good idea to examine your personal assets, business structure, and where your investments are held. Certain structures can benefit from reduced or capped tax rates. For instance, the company tax rate is a flat 25% for small businesses in 2022, which can make a huge difference if your business is generating significant revenue.
4. Keep detailed records
If you keep better tax records, your accountant will be able to substantiate more deductions, which will help you pay less tax! Keeping your records in check means you will be able to have all the answers should the ATO start enquiring about your returns
5. Carry out a stocktake
Performing a stocktake enables you to be able to get an accurate stock valuation, whilst also writing off any damaged, out of date or discontinued stock. Stock holdings can be valued at either cost or net realisable value, whichever is lower.
6. Update your vehicle logbook/s
To make sure you claim the most on your motor vehicle expenses, ensure that your log books are up to date.
7. Look at your debtors
Have a look at your debtors with a view to writing off any debts you won’t recover. Written off debts will reduce your income in the year that you write them off, even if it’s not the year you invoiced them in.
8. Check your invoicing
It can be beneficial to postpone invoicing for the current financial year, to the following financial year, where possible.
9. Document any trust resolutions
Trustees of discretionary trusts are obligated to document their resolutions on how the income from the trust is distributed to its beneficiaries before the 30th June each year.
If a valid resolution has not been completed by the 30th June, any default beneficiaries are eligible to the trust’s income, and are subject to tax. For any income which is obtained, but not distributed by the trust, the trust will be assessed at the highest marginal tax rate on this income.
10. Take advantage of Temporary Full Expensing
Using the temporary full expensing rules will allow you to instantly deduct the cost of new and used business assets you buy from your assessable tax.
11. Contribute to your super
Make sure you add to your voluntary superannuation contributions! The concessional contribution caps were increased to $27,500 per person in the 2022 year meaning you can contribute extra before 30 June. Also, if your super balance is below $500,000 you may be able to contribute even more this year by taking advantage of your unused contribution caps of prior years.
12. Pre-pay your expenses
You may be able to pre-pay some expenses that you will incur in the next financial year in the current financial year. For example, professional subscriptions, rent and insurance etc.
13. Take advantage of negative gearing on any investment properties
When the expenses outweigh the income you receive on an investment property, you can claim the difference as a tax deduction. Now is a good time to review if there are any repairs to take care of or other expenses that can be paid before 30 June.
14. Look into income protection
Should something ever happen to you, having income protection insurance can help to ensure your family is taken care of if you are out of action for any length of time. Income protection insurance is also tax deductable!
Should you need to discuss any of the above, please do not hesitate to contact our office on: (03) 8393 1000.