Greater cash flow security via tax plannng
It is that time of year where all businesses should be considering tax planning. Tax planning is about saving tax and knowing well ahead of
time how much tax if any will fall due the following year.
By saving tax, you are able to free up cashflow for other things, like paying down debt, contributing to super, reinvesting into the business or other investment assets.
Why not consider some basic measures:
Stocktake – Doing a stocktake at the end of year will allow you to potentially write off any obsolete stock. Remember stock is valued at the lower of cost or market value.
Asset Schedule – reviewing your depreciation schedule and noting any items that have been scrapped or no longer in use will increase your depreciation claims.
Superannuation - Make sure that your superannuation contributions for employees are paid to the nominated super funds by 30 June in order to receive tax deduction. Contributions must be received by the fund by 30 June.
Equipment – if you are a small business, take advantage of the $20,000 instant asset write off which ends this financial year. Items of equipment need to be purchased prior to 30 June 2018, in order to get the claim in the current financial year.
Bad Debts - Review your debtors ledger before 30 June and write off bad debts in order to get the deduction. Also remember to claim the GST input tax credit on the June BAS.
Pre-paid Expenses – Small business can claim a deduction for certain expenses relating to the next 12 months, if paid by June 30. Examples of items that can be pre-paid are lease payments, insurance and interest. Bringing forward other necessary expenses is another way to increase your deductions.
Defer Income – Items like interest and dividends are assessed when received, so deferring where possible will assist lowering income for the year.
These are some general tax planning measures. However, at JKA we always consider other more client specific measures. For example, accruing staff bonuses, director’s loan accounts , FBT matters, realising capital losses, year end issues relating to accounting software and director’s/personal superannuation contributions to name a few.
If your accountant is not talking about tax planning, give us a call us on 3256 0822 and let’s start saving tax.