Last Minute Tax Reminder for Businesses
As we get closer to the end of financial year, you may be thinking about what deadlines you still need to meet for your business, as well as how you may be able to claim some tax benefits.
1. Maximise Deductible Contributions
The concessional superannuation cap for 2018 is $25,000 per year. Do not go over this limit or you will pay more tax!
Note that employer super guarantee contributions are included in these caps. Where a concessional contribution is made that exceeds these limits, the excess is included in your assessable income and taxed at your marginal rate, plus an excess concessional contributions charge.
In order to claim a tax deduction in the 2018 financial year, the super fund must receive the contribution by 30 June 2018.
2. Full Claim for Assets Less Than $20,000
If your business is a Small Business Entity (turnover less than $10 million), the following tax concessions apply:
- Depreciating assets valued at less than $20,000 will be immediately deductible
- Depreciating assets valued at more than $20,000 will be depreciated in one pool at a rate of 15% in the first year and 30% in future years
- If your pool balance at the end of the year is less than $20,000 before applying any other depreciation deduction, the entire pool balance can be written off.
Note: this benefit was scheduled to end on 30 June 2018, but the recent budget extended this by another 12 months,.
3. 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 tax deduction for the reimbursement payment to the employee (for the equipment cost), claim any GST input credit, 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 2018.
4. Pay Employee Superannuation Now
To claim a tax deduction in the 2018 financial year, you need to ensure that your employee superannuation payments have CLEARED your business bank account by 30 June 2018.
5. Defer Income
If possible, defer issuing further invoices and receiving cash/debtor payments until after 30 June 2018.
6. Bring Forward Expenses
Purchase consumable items BEFORE 30 June 2018. These include marketing materials, consumables, stationery, printing, office and computer supplies. Spend the money now and get the deduction this year
7. Repairs & Maintenance
Make payments for repairs and maintenance (business, rental property, employment) BEFORE 30 June 2018.
8. Defer Investment Income & Capital Gains
If possible, 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 2016.
The Contract Date is generally the key date for working out when a sale occurred, not the Settlement Date!
9. 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 2018. You should make a record of your odometer reading as at 30 June 2018, and keep all receipts/invoices for motor vehicle expenses.
An alternative (with no log book needed) is to simply claim up to 5,000 business kilometres (based on a reasonable estimate) using the cents per km method.
10. Investment Property Depreciation
If you own a rental property and haven’t already done so, arrange for the preparation of a Property Depreciation Report to allow you to claim the maximum amount of depreciation and building write-off deductions on your rental property.
11. Private Company (“Div 7A”) Loans
Business owners who have borrowed funds from their company in previous years must ensure that the appropriate principal and interest repayments are made by 30 June 2018 Current year loans must be either paid back in full or have a loan agreement entered into before the due date of lodgement for the company return or risk having it counted as an unfranked dividend in the return of the individual.
12. 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 2018. Review your listing and write-off any obsolete or worthless stock items.
13. Write-Off Bad Debts
Review your Trade Debtors listing and write off all Bad Debts BEFORE 30 June 2018. Prepare a minute of a Directors’ meeting, listing each Bad Debt, as evidence that these amounts were actually written off prior to year-end.
14. Small Business Concessions – Repayments
“Small Business Concession” taxpayers can make prepayments (up to 12 months) on expenses (e.g. Loan Interest, Rent, subscriptions) BEFORE 30 June 2018 and obtain a full tax deduction in the 2018 financial year. You can do this if your turnover is less than $10m.
15. Trustee Resolutions
Ensure that the Trustee Resolutions are prepared and signed BEFORE 30 June 2018 for all Discretionary (“Family”) Trusts. Please see us for more information about these resolutions.
16. Declare Staff Bonuses
If you plan on paying any staff or directors bonuses for FY18, you should hold a board meeting and formally declare those bonuses and record your decision in a minute. This will allow you to claim a deduction for the bonus even though you don’t intend to pay it until the new financial year.