Small Business –
Last Minute Year Tax Planning

In relation to deductions, the general rule is that you can claim a deduction for expenses your business incurs that is linked to making or trying to make money.

This month we look at a number of tax planning opportunities –

• Claiming interest on business related loans. – Any interest that is accrued on a business purpose loan but not physically paid by June 30 may be deductible.
• Managing the value you put on trading stock – There are three different methods of valuing stock, you can choose which ever method provides the best tax outcome.
• Capital Gains Tax Tactics – As a general rule, the disposal of a CGT asset occurs at the contract date, and not settlement which may occur in the following year.
• The good news about bad debts – It might pay to go back through your outstanding invoices to identify any doubtful debts to write off before the 30th June.
• Commit to employee bonuses or director fee bonuses – If you are committed to paying employees or directors end-of-year bonuses, the accrued expense can be claimed as a tax deduction even if its not physically paid until the following year.
• Take advantage of the $20,000 net of GST instant asset write off – applies to all Plant & Equipment including cars used in your business see blog also for advanced details

Planning for 2015-16 Budget Changes

• Immediate deductability for start-up cost for new businesses – Small businesses starting out from the 2015-16 income year will get an immediate deduction on a range of professional expenses associated with starting up a new business, which previously were written off over 5 years under the black hole provisions.
• Reduced Tax Rates to 28.5% comes in June 30 2016 – Tax deductions will be worth more in 2016 than in 2017 financial year.
• FBT changes for work-related electronic devices – from 1st April 2016, business will be able to provide more than one portable electronic device.
• CGT roll-over relief for change from Sole Trader or Trust to a Company – from 1st July 2016 businesses will be able to change business structure without attracting CGT liability.

Last-minute tax planning for individuals

This financial year is almost over, but there are still tactics you may use to reduce your tax for the 2014-15 year.

We provide a list of most job specific tax deductions, just click on your occupation to get a list of all recognised tax deductions, find your occupation, and click to get a list of deductions.

• Your Occupation Tax Return Checklist

Investment Property

• Repairs and Maintenance expenses –  stemming from your rental property can be claimed in full or in part, so it can be helpful to bring forward any expenses that can be undertaken before June 30.
• See Rental Property Tax Deduction Checklist for Advance details
• Rental Property Expenses – When Should I Consider Prepaying?
• Salary Sacrifice Rental Property Expense and Save!
• Record Keeping – make it easier for your accountant this year
• Depreciation – Could be the difference between positive or a negative geared investment!
• Pre-pay investment loan interest – most investors can claim a deduction for up to 12 months ahead.

Consider buying an investment property

Building an investment property portfolio over time will provide many tax planning opportunities.
We provide a guide to building a property portfolio –
“7 Elements to Building a Successful Property Portfolio”
Register – Webinar – Fundamentals of Property Investments June 17, 2015, 7-8pm.

Consider bringing forward or deferring income and expenses

• If your income is higher this year than next – look to bringing work expenses into this year!
• If your income is going to be higher next year – look to deferring work expenses until next year!

Use the CGT rules to your advantage

• If you have crystallised any capital gains from selling any investments this year, think about selling any investments you have make a loss on before June 30.See Capital Gains & Property,
• Demolishing an old rental property – what are the CGT Implications
• CGT renting your principal home
• Can CGT be applicable to a Pre 1985 Property – Yes !

You can claim up to $300 of work-related expenses without receipts

• Provided the claims are reasonable for outgoings to earning assessable income.

End-of-year superannuation planning.

Maximise after-tax contributions

• Double-check your non-concessional (after-tax) contributions figures are no more than $180,000 – allowable cap.

Consider Salary Sacrificing.

• If you are likely to receive a bonus before year-end, you can always salary sacrifice it into superannuation, to take advantage of the 15% concessional tax rate.

Use personal deductible contributions to offset a capital gain

• If you satisfy super’s “10% rule”, you may be eligible to claim a deduction for personal super contributions to offset a capital gain from the sale of investment assets.

SMSFs – Make Insurance more affordable

• Purchase life or TPD insurance via your SMSF.

Purchase or transfer a Property in your SMSF

• Extra super contributions can be used to fund a property portfolio inside your SMSF
• Download – The 10 common mistakes in buying property through SMSF (e-book)
• Pre-recorded SMSF Webinar presentation

Working from home – tax implications

In general terms, the Tax Office takes the view that expenses associated with a person’s home is more likely to be private. However if you produce income from home, then expenses related to that income can be claimed in full or in part.

Two main scenarios

1. Used in connection with your income, but isn’t your main place of business
2. Your home is your principal place of business

This month we explore the different tax deductions available within the two separate scenarios

• Depreciation
• Running costs
• Telephone & Internet
• Deductions for Occupancy –

1. Rent, or mortgage interest
2. council rates
3. land taxes
4. house insurance premiums
5. repairs, maintenance, capital improvements

See also ATO Tax Ruling TR 93/30