If you could effectively minimise your tax, you just might be able to top up your superannuation, pay off part of your home or business loan, invest funds or even upgrade your car and have a holiday. Seek small business accounting services to know the many ways you can reduce your business tax.
Find out if your business is a base rate entity because if it is, you would be able to access a variety of tax concessions from the ATO. You can qualify if you have an aggregated turnover of $50 million or less and 80% or less of your assessible income should be passive for all or part of the 2019 year. If you are a base rate business, your company tax rate would then be reduced to 27.5%. You can use a trust structure and allocate profits to a “Bucket Company” and your tax rate would remain at 27.5% for the year.
If you have a turnover of less than $10 million, you can apply tax concessions to certain depreciating assets. The instant asset write-off gives great tax advantages to businesses looking to invest in assets between now and June 2020. Please get in touch with us if you want more detail on the rules and how you can take advantage of them.
You can also maximise deductible superannuation contributions. The concessional super cap for this year is $25,000 for all individuals, so make sure you don’t go over the limit or it will mean more tax for you. Employer superannuation guarantee contributions are included in these limits. If a concessional contribution exceeds these caps, the excess will be included in the assessable income and taxed at marginal rate with an excess concessional contributions fee. The contribution will be counted towards the employee’s 2019 contribution cap if it is received by 30 June 2019. Speak to an expert who offers small business accounting services for more information.
You can claim a tax deduction if your employee super payments are received by the super fund or the Small Business Superannuation Clearing House by 30 June 2019. Avoid making last minute super payments because of processing delays. Contact us if you need to make last minute payments and would like to claim them as deductions for this year.
If you purchase Tools of Trade or other FBT exempt items, you can buy equipment with tax benefits. This includes handheld or portable tools of trade, computers, software, electronic organisers, briefcases, mobile phones and cameras, etc. You may be entitled to a tax deduction for the reimbursement payment to the employee and claim any GST input credit. The employee’s salary package will be reduced by the GST-exclusive cost of the purchased items. Note that the items should be purchased before 30 June 2019. If applicable, you should also prepare a detailed stock take and work in progress list before 30 June 2019 and write-off any worthless or obsolete stock items.
You can also defer issuing invoices and receiving debtor or cash payments until after 30 June 2019 to push tax payable to future years. You may also arrange for the receipt of Investment Income and the Contract Date for the sale of capital gains assets to occur after 30 June 2019. On the other hand, you can buy consumable items or pay for repairs and maintenance before 30 June 2019 so you can get the deduction this year.
Make sure you keep a complete and accurate motor vehicle log book for a minimum of 12 weeks, which must start on or before 30 June 2019. In the absence of a log book, you can claim up to 5,000 business kilometres using the cents per kilometre method. If you own a rental property, you can arrange for the preparation of a property depreciation report so you can claim the maximum amount of depreciation and building write-off deductions on the property. Taxpayers may also make prepayments on expenses before 30 June 2019 to obtain a full tax deduction this year. It is a good idea to seek out small business accounting services to maximise these deductions.
Business owners who have loans from their company should make the appropriate principal and interest repayments by 30 June 2019. Loans made this year should be paid back in full or have a loan agreement before the lodgement due date of the company return to avoid having it counted as an unfranked dividend in the individual’s return. Review your trade debtors listing and write-off bad debts into your accounting system before 30 June 2019 as well. Trustee Resolutions should be signed before 30 June 2019 for all Discretionary Trusts.
As you look for different ways to grow and improve your business, seeking professional advice could prove to be an important and helpful decision.
You can click here to speak to business experts. We would love to help you formulate investment strategies and streamline your processes to take your business to the next level. Our goal is to help you grow your business, find ways to invest more and increase your productivity.