With only 2 weeks to go until June 30th we outline below some last-minute tax planning opportunities.
If you would like to discuss any of the following in relation to your business please do not hesitate to contact our office on 02 4227 6744.
Capital Expenditure up to $20,000
For expenditure on capital items that cost less than $20,000 there is an immediate write-off for businesses with turnover less than $10 million.
Bad Debt Deductions
A taxpayer can only claim a bad debt if the debt:
a) Is written off before year end; and
b) Has previously been included in the taxpayer’s assessable income.
Trading stock can be valued at year end using one of the following methods:
1) Cost price; or
2) Market selling value; or
3) Replacement value.
The provisions allow a choice of method for each individual item.
Obsolete stock can also be effectively written off giving rise to a tax deduction.
Individuals and businesses with an annual turnover of less than $10 million may be eligible for an upfront deduction where the service period is less than 12 months.
Bonuses paid prior to 30 June are tax deductible this year.
Superannuation Guaranteed Contributions (Employee Super)
Employee superannuation contributions are legally payable by the 28th day after the end of each quarter.
From a taxation perspective, you only get a tax deduction in the year that contributions are actually paid.
Therefore, you could pay the June quarter SGC prior to 30 June 2017 and claim a tax deduction this financial year rather than next year.
Maximum Deductible (Concessional) Contributions Cap will decrease to $25,000 for everyone
From 1 July 2017, the concessional contribution cap will be reduced from $30,000 to $25,000, or for those who were 49 or older on 1 July 2016, from $35,000 to $25,000.
Concessional contributions include your employer’s contribution (the compulsory 9.5%), plus any amount you salary sacrifice, or if self-employed, any amount you claim a tax deduction for.
Non-Concessional Contributions Cap will drop to $100,000
From 1 July 2017, the non-concessional cap reduces from $180,000 to $100,000. Non-concessional contributions are your own personal contributions for which you can’t claim a tax deduction.
Income and Expenditure
Often costs that will arise in July or August can be brought forward into the current year and claimed this financial year.
While consideration needs to be given to a business’ cash flows, sometimes income or invoicing clients can be postponed until July or later in the year and hence reduce taxable income now.