Year End Tax Planning

OPTIONS FOR EMPLOYEES AND INVESTORS

Defer receipt of income – wages, bonus, director’s fees, commissions, rent, interest and dividends.
Defer capital gains on property, shares etc
Accelerate Deductions – for work related expenses and investment linked expenses (e.g. prepay interest)
Bring forward and realize any potential capital losses but only if there are capital gains to be offset
Superannuation co-contribution – paying up to $1000 into your superannuation fund if you are entitled to the government co-contribution
Medicare Levy Surcharge is payable if you do not have hospital cover in your private health insurance and your income (or combined income for couples) is over the current year thresholds.

For businesses with current turnover not exceeding $2 million, can opt to be taxed on a cash basis instead of accrual basis (no debtors or creditors including in account), can also use pooled and one single rate of depreciation for all assets and may not need to conduct stock takes.

As at 01 July 2015 the following Small Business Entity changes have been made.
- Write off depreciating assets costing less than $1,000 in the income year in which start to use the asset or have it installed ready for use for a taxable purpose.
- Depreciating assets costing greater than $1,000, one small business pool will exist where assets will be depreciated at 15% in the year of allocation and 30% in subsequent years regardless of effective life.

In general terms, you can still follow many of the basic planning options set out above for employees and investors, i.e.
- Defer income where possible
- Defer capital gains
- Accelerate deductions
- Bring forward capital losses but only to offset capital gains

Pay all employees superannuation including your own, into the fund on or before 30 June

Directors fees and bonuses are only a tax deduction to the company if they are paid by 30 June or are authorized by an appropriate action before 30 June (e.g. a directors minute)

Bad debts must be written off in the books on or before 30 June to claim tax deduction

Writing off or writing down obsolete stock must also be done by 30 June in order to gain the benefit of the reduced stock value and resulting tax benefit

Prepayments can be a tax deduction provided there is some commercial benefit in the arrangement but must not relate to expenditures beyond the coming 12 months

Loans by companies to their shareholders or associates should be repaid by 30 June if the company is showing a profit in the current year or in the accumulated profits of prior years or a formal loan agreement with interest and set repayments should be entered into (Division 7A loan )