By Andrew Hayes, Director, Westlawn Business Services 12 May 2015
With 30 June just on 7 weeks away, now is the time to start planning for the end of financial year. Here are some EOFY strategies that could help you maximise the tax benefits available to small business … and help set your business up for a prosperous new financial year.
Manage your CGT liability
If you make a capital gain on the sale of an asset this financial year, consider selling any poorly performing investment before 30 June. This may allow you to use the capital loss to offset the capital gain. Alternatively, consider delaying any sale of profitable assets until after 30 June. This way, you could defer paying tax on the capital gain for up to 12 months. And, if you expect to earn a lower taxable income next financial year, the capital gain may be taxed at a lower marginal rate.
Small business operators may be eligible for CGT concessions on the sale of business assets. To review your potential concessions this financial year, contact your Westlawn Business Services Accountant.
Bring forward deductible expenses
To reduce your taxable income this financial year, you could bring forward expenses that are otherwise tax deductible in the following financial year. You could also defer income, where possible.
Purchase necessary office equipment and pay expenses before 30 June so you can claim a deduction this financial year. You may also be able to utilise tax concessions on depreciating assets.
Consider pre-paying 12 months’ interest on a fixed rate investment loan. Alternatively, carry out last minute maintenance or repairs to business premises or investment properties.
Also, by pre-paying 12 months’ insurance premiums on income protection policies held outside superannuation before 30 June, you can generally claim the full tax deduction this financial year.
Write off bad debts
If you have any bad debts, the debt must be physically written-off in your books of account by 30 June to claim a tax deduction this financial year (rather than at a later time such as when the accounts are finalised).
Structure asset purchases to maximise cash flow
Keeping income producing assets up-to-date helps your business operate more efficiently.
Review the way these assets are funded and the cash locked up in them.
Depreciable assets can often be funded with no upfront deposit. Consider securing vehicle and equipment finance before 30 June.
Depending on your situation, you may also be entitled to claim an input tax credit for GST included in the price of the asset acquired. Additionally, the interest you pay plus the depreciation of the asset should generally be tax deductible to the extent the asset is used in your business.
Check eligibility for small business tax regime
If your small business has annual turnover of less than $2 million (gross of any expenses and net of GST) you may be eligible for a range of tax benefits including simplified depreciation and CGT concessions/exemptions. Regularly check your eligibility in relation to these concessions and exemptions with your Westlawn Business Services Accountant.
Contact us to discuss your situation
These EOFY strategies are meant as a guide only and do not take into account your specific business situation. To find out how your business can take advantage of the opportunities available before 30 June, contact your Westlawn Business Services Accountant.
Disclaimer Westlawn Business Services Pty Ltd provides this information for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation.