End of financial year tax tips
Author - Marcus Davis, Tax Specialist, WHK Albury
I don't want to pay any more tax than I have to - how can I reduce my tax?
With 30 June fast approaching, it's time to start thinking about what can legitimately save you tax.
Unfortunately, there is no magic bullet for saving tax.
Most tax savings strategies involve spending money to claim a tax deduction, so it is important that you consider your cash flow needs carefully.
One of the more common strategies is to make tax deductible superannuation contributions. For a self-employed person or a business owner, this requires making super payments, for your employees and/or yourself, before 30 June. For an employee, this means salary sacrificing an additional super contribution from your June salary/wages.
Remember, the maximum you can put into super for the year and claim a deduction is $25,000, or if you are aged 55 or over then its $50,000. If you want to make a super contribution, I recommend that you first discuss it with your tax agent and/or financial planner.
Another tax saving strategy for businesses is to bring forward future expenses. If you are going to buy something in July, why not do it before 30 June. For example, repairs to your property or machinery or stock up on stationary and office supplies.
If you are a small business, you can prepay some expenses for next year, like rent, interest or insurance. Unfortunately, medium and large businesses (with turnover of more than $2 million pa) can only prepay expenses required by law (eg. workers' compensation insurance) or expenses of less than $1,000. Individuals who are not in business can prepay interest on investments loans.
Some things which don't impact cash flow but can save tax include scrapping obsolete stock or equipment or writing off any bad debts. To write off a bad debt it must be documented and physically written off in your accounts.
You should consult with your tax agent to create a tax savings plan tailored to your business or personal needs. If you would like more information of this topic or have another tax question e-mail me at tax.albury@whk.com.au.
This information is general in nature and readers should seek specialist advice before making financial decisions. WHK Pty Ltd ABN 84 006 466 351
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