With the end of the financial year just around the corner, there are a range of strategies available to minimise your business tax burden.
Some of the strategies include:
- The government will extend the $20,000 immediate expenditure write-off for a further 12-months to 30 June 2019.
- Accelerated expenditure allows you to include upcoming expenses in this year’s tax return. So long as you incur the expense of a goods or services, you can claim that expense in this year’s tax return even if you actually pay for the bill in the next financial year.
- The ATO has confirmed that small business taxpayers are generally entitled to claim expenses on an accrue basis, whilst still being entitled to recognise income on a cash basis. Some of the common business deductions that can be claimed for amounts that are incurred in the 2017/2018 income year and are not paid include: Director’s fees, staff bonus, commission, gross salary, rent and interest expenses.
- Small business can claim an outright deduction for prepaid expenditure as long as either the eligible service period is less than 12 months or the deduction is less than $1,000.
- You can also claim the Superannuation payments for the April to June quarter so long as the payments are made before 30 June 2018.
Other planning strategies involve the deferral of recognising income and valuation opportunities that allow business to reduce the closing balance of any trading stock that may be held as at 30 June 2018.
The corporate tax rate has also been reduced to 27.5% for small business taxpayers that qualify as a “base rate entity”.
On the personal income front, the removal of the 2% temporary budget repair levy will result in a reduction in the overall tax burden for taxpayer’s earnings more than $180,000.
The above are some of the tax minimisation techniques TaxGo will be applying to your business when preparing your tax returns.