10 Tips to Prepare YOU for Tax Time

10 Tips to Prepare YOU for Tax Time

Reduce your tax this year in the sprint to the finish!

The majority of people think ‘tax time’ is after the end of the financial year, but they would be wrong! The tax savvy and financially organised will start planning their campaign to minimise their tax BEFORE the end is near. Ideally, this would happen a few months before June 30, but you know what they say – “better late than never!”

Why bother?

Those who best (and legally!) minimise the amount of tax they pay understand that once the financial year ends, many of the options available to save tax disappear.

It’s all about planning ahead, to get ahead.

To get the ball rolling on your tax planning this year, read the following checklist and then get in touch so we can make a time to sit down with you to assess which of the following preventative measures can be done for you in your circumstances.

Depending on your situation, this tax planning process could save you many thousands of dollars.

  1. Review your Debtors

Your income tax is payable on any invoices you’ve issued, even if you haven’t been paid. Don’t pay tax on any invoice you know won’t ever get paid. Review the list of those who owe you money and write off those bad debts now.

  1. Review your Stock Levels

The value of your closing stock directly affects your business profit because the higher your stock value, the higher your profit and therefore the higher your tax. Review and identify obsolete or old stock and scrap it or re-value it to its correct value. Individual items of stock can be valued at cost, market value, or replacement value.

  1. Review your Business Assets

Write off any obsolete assets and claim its remaining book value now. There are also new ways assets can be depreciated, called pooling, that will increase the depreciation expense. This isn’t suitable for all businesses, but it is worthwhile reviewing.

  1. Defer Income

If your cash flow allows, you may consider deferring some of your invoices until July. If the income was not invoiced this financial year, it can’t be taxed this financial year. Before taking this option we recommend having a budget to manage these months’ income and expenses. We can help you with that.

  1. Review your Invoices Issued

If you have invoiced someone in advance for services you will provide in the next financial year, then you may not have earned that income in this tax year. That income may belong in the year you provide the service. Again, this is something we can work out with you when we meet for tax planning.

  1. Pay the June Quarter Superannuation

Superannuation if paid on time is deductible when paid. Since you have to pay the 9% superannuation by 28 July, bring it forward a month and pay it now and claim the deduction now. Why wait a whole year to reduce your tax?

  1. Using all of your Superannuation Cap

If maximising your superannuation is part of your retirement plan, then don’t forget to contribute as much as you can into your super fund. We can guide you as to how much you can contribute. It’s a missed opportunity not to do this each year.

  1. Employee Bonuses

Bonuses to employees are deductible when the business has committed to paying them and it is not subject to any discretion. So finalise and sign off on the bonuses to be paid and reduce this years’ tax.

  1. Capital Gains Tax (CGT)

Minimising your capital gains tax is often about timing. Ensure the asset has been owned for at least 12 months. If you already have a capital gain, are there any investments making a loss you can sell? Do you qualify for any capital gain rollover relief concessions? (Again, we can guide you here). Capital Gain Tax (CGT) is a whole topic on its own, and the potential savings are so great, it is definitely an area in which you should seek our guidance.

  1. Structure

It’s a good time to review the structure you’re working under, to make sure it’s the best option for asset protection and flexibility for the distribution of profits in the most tax-effective manner.

If you ticked any of the above items, then we need to talk.

Contact us now or email us on kmtp@kmtpartners.com.au to make a time to meet and discuss your tax planning options.

#TaxTime #Planning #Accounting #SeekHelp

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