The end of the 2011/12 financial year is almost here, so now’s the time to review what strategies you can use to minimise your tax.
1. Concessional Superannuation Caps
The concessional superannuation caps for 2012 are $25,000 for persons under age 50, and $50,000 for persons aged 50 and over. Do not go over these limits or you will pay more tax!
Note that employer super guarantee contributions are included in these caps. Where a contribution is made that exceeds these limits, the excess is taxed to the fund member’s account at an effective rate of 46.5%.
In order to claim a tax deduction in the 2012 financial year, the super fund must receive the contribution by 30 June 2012.
2. Tools of Trade / FBT Exempt Items
The purchase of Tools of Trade and other FBT exempt items for business owners and employees can be an effective way to buy equipment with a tax benefit. Items that can be packaged include Handheld/Portable Tools of Trade, Computer Software, Notebook Computers, Personal Electronic Organisers, Digital Cameras, Briefcases, Protective Clothing, and Mobile Phones.
If structured correctly, the Employer will be entitled to a full tax deduction for the reimbursement payment to the employee (for the equipment cost), and the employee’s salary package will only be reduced by the GST-exclusive cost of the items purchased. You should buy these items before 30 June 2012.
3. Employee Superannuation Payments
To claim a tax deduction in the 2012 financial year, you need to ensure that your employee superannuation payments have CLEARED your business bank account by 30 June 2012.
For any last minute superannuation payments, we recommend that you arrange for a BANK CHEQUE made payable to your employee super fund prior to 30 June 2012.
4. Defer Income
Where practical, defer issuing further invoices and/or receiving cash/debtor payments until after 30 June 2012.
5. Bring Forward Expenses
Purchase consumable items BEFORE 30 June 2012. These include stationery, printing, office and computer supplies.
6. Repairs & Maintenance
Make payments for repairs and maintenance (business, rental property, employment) BEFORE 30 June 2012.
7. Defer Investment Income & Capital Gains
If practical, arrange for the receipt of Investment Income (e.g. interest on Term Deposits) and the Contract Date for the sale of Capital Gains assets, to occur AFTER 30 June 2012.
The Contract Date is the key date for working out when a sale occurred, not the Settlement Date!
8. Motor Vehicle Log Book
Ensure that you have kept an accurate and complete Motor Vehicle Log Book for at least a 12-week period. The start date for the 12-week period must be on or before 30 June 2012. You should make a record of your odometer reading as at 30 June 2012, & keep all receipts/invoices for motor vehicle expenses.
9. Investment Property Depreciation
If you own a rental property and haven’t already done so, arrange for the preparation of a “Depreciator” Report to allow you to claim the maximum amount of depreciation and building write-off deductions on your rental property.
10. Private Company (“Division 7A”) Loans
Business owners who have borrowed funds from their company must ensure that the appropriate principal and interest repayments are made by 30 June 2012.
11. Year End Stock Take / Work in Progress
If applicable, you need to prepare a detailed Stock Take and/or Work in Progress listing as at 30 June 2012. Review your listing and write-off any obsolete or worthless stock items.
12. Write-off Bad Debts
Review your Trade Debtors listing and write off all Bad Debts BEFORE 30 June 2012. Prepare a minute of a Directors’ meeting, listing each Bad Debt, as evidence that these amounts were actually written off prior to year-end.
13. Small Business Concessions – Prepayments
“Small Business Concession” taxpayers can make prepayments (up to 12 months) on expenses (e.g. Loan Interest, Rent, subscriptions) BEFORE 30 June 2012 and obtain a full tax deduction in the 2012 financial year.
14. Trustee Resolutions
Ensure that the Trustee Resolutions are prepared and signed BEFORE 30 June 2012 for all Discretionary (“Family”) Trusts. Please see us for more information about these resolutions.
15. Directors’ Fees/Bonuses
If applicable, these payments must be approved in writing (e.g. by a resolution or meeting of directors) BEFORE 30 June 2012. This will ensure that the deduction can be claimed in the 2012 tax year. If the actual payment is made on or after 1 July 2012, the director would include the income in their 2013 tax return.
Talk to us TODAY before the 30 June 2012 deadline for assistance to reduce your tax!