With tax time and end of financial year right around the corner, it’s time to start thinking about the things you can do now to maximise your return and get through tax time seamlessly.
1. Ensure your superannuation is up to date: Ensuring personal contributions are paid by 30 June will allow time for processing delays and getting valuable deductions this year. Although superannuation doesn’t have to be paid until 28 July, paying your employees personal contributions early will ensure you’re not missing out on deductions. Superannuation payments must be cleared through your bank account, received and recorded by your employees superannuation fund.
2. Make your charity donations now: Making your charity donations now instead of waiting will ensure you can claim it as a deduction so you don’t miss out. Ensure you make your charitable donations before July 1.
3. Keep your records and make sure they are ready for your accountant: Good record keeping is key to making tax deductions. For most deductions, you will be required to have kept clear and accurate records for a period of time. Make sure you track down all your records and receipts prior to tax time so they are ready to use by your accountant.
4. Pay expenses in advance: If your cash flow allows it, consider paying expenses such as insurance, rent and interest in advance. This means you will be able to get an immediate deduction. If you expect your tax pay will be higher this year than next year, you may benefit from deferring income to next year and accelerating deductions. Make sure you pay any expenses before June 30 that will attract a tax deduction.
5. Claim deductions now for future: Make sure you’re aware of future expenses you need to pay and are committed to, even if you haven’t received or used them by June 30. You may also be entitled to claim an immediate deduction from this. These expenses may include: salaries, wages and bonuses.
6. Write off bad debts: If they aren’t going to pay, write them off and get the tax deduction from it now. There’s no point in prolonging it.
7. Government co-contribution: If you earn less than $31,920, consider making a contribution into your superannuation of $1,000 and the Government will match this contribution. The co-contribution gradually decreases as salary goes up from $31,920 until it ceases at $61,920.
8. Claim all costs associated with doing your tax: Remember you can claim a deduction for all your tax agents’ fees and related expenses.
9. Defer income: A good way to do this is to hold off invoicing customers and clients where possible until after June 30. Deferring income will mean you will effectively pay less tax.
10. Depreciation schedule: If you have a rental property, make sure you get your depreciation schedule organised if you haven’t already had one done. This will effectively allow you to accurately claim a deprecation on your rental property. Check out our previous blog on depreciation schedules for more information.
11. Private health insurance: The Medicare levy surcharge adds an extra 1 per cent tax for singles earning over $88,000, or couples earning over $176,000. This rises to 1.25 per cent at higher income levels, and up to 1.5 percent for singles earning over $136,000 and couples earning over $272,000. This surcharge can be avoided by taking out the appropriate level of hospital cover with an approved health fund.
12. Get rid of obsolete stock: If you have stock that isn’t selling, now is the time to get rid of it. Write off old, damaged or obsolete stock by June 30 and the write-off value will provide an immediate tax deduction.
13. Be aware of depreciation changes: Business can claim an immediate deduction for a depreciating asset when the cost is less than $6,500 in the 2013-14 year if it is used or installed ready for use for an income producing purchase by 31 December 2013. If purchased after that date, the threshold is reduced to less than $1,000 per item.
14. Make sure all your contact details are up to date: If you have moved or had any of your personal contact details change, make sure this is up to date by tax time.
15. Talk to us: The best tax strategy is ultimately talking to us here at Fortis Accounting Partners and finding the best way to maximise your tax return.
Please don’t hesitate to contact us if you have any questions about preparing for tax time.
