It is that time of year again where business owners start thinking of legitimate ways of reducing their tax before 30 June. Here are 6 end of year tax tips
$20,000 instant asset write off
As for 2015, the federal governments instant asset write-off is again a great way to reduce your tax. If your business is in need of some new equipment, and the cost of the equipment is below $20,000, you are able to obtain an instant tax deduction for the purchase (assuming you meet the criteria). However please only take advantage of this opportunity if the business needs new equipment. Don’t spend money just for the sake of it. Make sure it is for the benefit of the business performance
Business should make sure that they incur, and in some instances pay, for all deductions that they can before 30 June. Check that all costs are included in the end of year financials.
This is a two pronged attack on deductions. For business owners, ensure that you are contributing to the maximum amount allowable. For those under 50 this amount is $30,000. For those over 50 the amount is $35,000. In addition to this make sure that superannuation is paid up for all your staff prior to 30 June. Superannuation can only be claimed as a tax deduction when it is paid. Ensure that the superannuation for the June quarter is paid prior to 30 June.
If you have customers that have not paid, despite your best attempts, now is the time to look at writing them off. Bad debts must be physically written off. This includes having documentary evidence that the decision has been made to write off the debt.
If your business has trading stock, now is the time to review what the business has on hand prior to 30 June. Review your stock for any obselete or old stock. Stock can be valued at the lower of cost or net realisable value. If any stock is now worth less than what you paid for it, now is the time to reduce the value to ensure you are not paying tax on an unreal value of stock
If you are claiming motor vehicle expenses under a log book method, ensure that the percentage you claim is accurate. You need to ensure also that the logbook is not older than five years. If it is you will need to complete a new log book.