2015 Business Tax Planning Strategies

2015 Business Tax Planning Strategies

The end of the 2014/15 financial year is fast approaching, so now’s the time to review what strategies you can use to minimise your tax.

  • Small Business Asset Depreciation

If your business is a Small Business Entity (turnover less than $2 million), then the following tax concessions apply:

  • Instant asset write off – the Act temporarily increases the threshold below which small businesses can claim an immediate deduction for the cost of assets from $1000 to $20,000. The increased threshold of $20,000 applies from 7.30pm (AEST), on 12 May 2015 until Friday 30 June 2017.
  • 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

 

  • Concessional Superannuation Caps

The concessional superannuation cap for 2015 is $30,000 per year for persons under 50, and $35,000 for persons over age 50. 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 contribution is made that exceeds these limits, the excess is taxed to the fund member’s account at an effective rate of 46.5%. In order to claim a tax deduction in the 2015 financial year, the super fund must receive the contribution by 30 June 2015.

 

  • Employee Superannuation Payments

To claim a tax deduction in the 2015 financial year, you need to ensure that your employee superannuation payments have CLEARED your business bank account by 30 June 2015.      For any last minute superannuation payments, we recommend that you arrange for a BANK CHEQUE made payable to your employee super fund prior to 30 June 2015. Also, check that your payroll system is now paying the required 9.5% rate (up from 9.25%) from 1 July 2014.

 

  • Defer Income

Where practical, defer issuing further invoices and/or receiving cash/debtor payments until after 30 June 2015.

 

  • Bring Forward Expenses

Purchase consumable items BEFORE 30 June 2015. These include stationery, printing, office and computer supplies.

  • Repairs & Maintenance

Make payments for repairs and maintenance (business, rental property, employment) BEFORE 30 June 2015.

 

  • Defer Investment Income & Capital Gains

If practical, 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 2015. The Contract Date is generally the key date for working out when a sale occurred, not the Settlement Date!

 

  • 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 2015. You should make a record of your odometer reading as at 30 June 2015, and keep all receipts/invoices for motor vehicle expenses.

 

  • 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.

 

  • Private Company (“Division 7A”) Loans

Business owners who have borrowed funds from their company must ensure that the appropriate principal and interest repayments are made by 30 June 2015.

 

  • 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 2015. Review your listing and write-off any obsolete or worthless stock items.

 

  • Write-off Bad Debts

Review your Trade Debtors listing and write off all Bad Debts BEFORE 30 June 2015. Prepare a minute of a Directors’ meeting, listing each Bad Debt, as evidence that these amounts were actually written off prior to year-end.

 

  • Small Business Concessions – Prepayments

“Small Business Concession” taxpayers can make prepayments (up to 12 months) on expenses (e.g. Loan Interest, Rent, subscriptions) BEFORE 30 June 2015 and obtain a full tax deduction in the 2015 financial year.

 

  • Trustee Resolutions

Ensure that the Trustee Resolutions are prepared and signed BEFORE 30 June 2015 for all Discretionary (“Family”) Trusts. Please see us for more information about these resolutions.

 

 

Contact us TODAY before the 30 June 2015 deadline for assistance to reduce your tax!

Email: info@jagaccountants.com.au or call  Julian on 0408033696

 

This information is of a general nature and does not take into account your individual needs and objectives.

 Please do not act on any information before seeking advice from a qualified Accountant and a licensed Financial Planner.

Ways to reduce your tax before 30 June 2015! – Strategy 1: Superannuation

The end of the 2014/15 financial year is fast approaching, so now’s the time to review what strategies you can use to minimise your tax.

 

  • Sacrifice Your Salary to Super

Salary sacrifice can be a great way to boost your superannuation and pay less income tax. By putting pre-tax salary into super rather than having it taxed as normal income at your marginal rate you may save tax. This can be especially beneficial for employees nearing their retirement age.

 

  • Superannuation Contributions

Certain individuals may be able to make tax-deductible personal contributions to superannuation. The advantage of this strategy is that superannuation contributions are taxed at 15% compared to typical personal income tax rates of between 34.5% and 49%. Superannuation contributions are limited to $30,000 per year for persons under 50, and $35,000 for persons over  50 years of age. Any contributions in excess of these limits can be taxed at the highest rate.  Be careful  not to go over these limits! Please contact us to determine if you are eligible for this deduction.

 

Contact us before the 30 June 2015 deadline for assistance to reduce your tax!

Email: info@jagaccountants.com.au or call  Julian on 0408033696

 

This information is general nature and does not take into account your individual needs and objectives.

Please do not act on any information before seeking advice from a qualified Accountant and a licensed Financial Planner.

Tax Update

Thinking about starting a business?
From July 1st 2015 the Government have committed to reducing the company tax rate to 28.5%
Hence establishing or restructuring your business as a company may be extremely tax effective.

The reduction to the company tax rate should benefit many corporate businesses across all sectors, but in particular those smaller companies who will benefit from a much needed cash flow boost to support business activity and growth.

Contact Julian from JAG Accountants for all your business and tax questions on 0408 033 696 or email info@jagaccountants.com.au to make an appointment at our Williamstown or Flemington Offices.

Our new office!

Photo of new office

JAG Accountants is proud to open our new office at 21 Shields Street Flemington.

Call us to arrange an appointment and receive a free half an hour consultation to discuss your tax and business needs!

Call 03 9397 4552 or 0408 033 696

 

 

2014 Tax Refund ?

Get your tax refund early this year! As soon as you receive your payment summary from your employer contact us to arrange for a fast tax return. Send us your tax docs and your tax return will be lodged within 24 hours!

Did you know…

  • Depending on your industry or occupation, you may be able to claim additional tax deductions. Such as depreciation on work related equipment, home office and many other items.
  • If you own a rental property there are depreciation and capital works deductions you may be able to claim.
  • You don’t even have to leave your house to get you tax return done – JAG Accountants can visit you at your earliest convenience. Contact us to make an appointment.

Thinking about starting a business…

We are specialists in assisting businesses with all their structuring, compliance and reporting obligations. We also provide strategies which can assist you grow your business and become profitable fast!  Contact us now and we can assist you take the next steps…

2014 Referral Program

2014 Referral Program

Refer a friend or family member to JAG Accountants and receive 1 hour free tax planning advice with  Julian Giuffrida CPA.

Other Tax Issues

Where individuals or partners in a partnership incur losses from business activities, the non-commercial loss rules should be considered as such losses may not be eligible for offset against other assessable income during the year unless certain conditions are satisfied.
Businesses need to ensure that they have kept proper records to substantiate expenses claimed in their tax returns, including a new car log book every 5 years, plus annual odometer records, travel diaries in appropriate situations, loan agreements and tax invoices.
Businesses need to continually review their operating structure to ensure that it is still appropriate taking into account issues such as asset protection, changes in marginal tax rates, and on-going changes to the small business capital gains tax concessions.

Deductible Superannuation Contributions

[vc_row][vc_column][vc_column_text disable_pattern=”true” align=”left” margin_bottom=”0″]The maximum superannuation contributions that can be claimed by employers on behalf of employees is:

YEAR AMOUNT
2014-15 $30,000
2013–14 $25,000

The above contribution limits apply equally to self-employed taxpayers who can claim a 100% deduction where less than 10% of the taxpayer’s total assessable income and reportable fringe benefits is from any employment income.

Note that employer and self-employed superannuation contributions need to be made before the person reaches the age of 75.

In order to obtain a deduction in the 2014 financial year, the contribution must to be received by the superannuation fund by 30 June 2014.[/vc_column_text][/vc_column][/vc_row]

Writing off Bad Debts

Where a taxpayer accounts for income on a non-cash basis and has previously included the amount in assessable income, a deduction for a bad debt can be claimed in 2009/10 so long as the debt is declared bad by 30 June 2010.

The business will need to show that it has made a genuine attempt to recover the debt by year- end to prove that the debt is bad. It’s preferable that this decision is made in writing (e.g. a board minute).

Businesses can also claim back the GST paid on debts that have been written off as bad, or where not written off as bad, the debt has been outstanding for 12 months or more.

Claiming Deductions for Expenses Not Paid at Year End

Both SBE and non-SBE taxpayers are entitled to an immediate deduction for certain expenses that have been “incurred” but not been paid by 30 June 2014 including:

Salary and Wages. A tax deduction can be claimed for the number of days that employees have worked but have not been paid until after 30 June 2014.

Directors Fees. A company can claim a tax deduction for directors fees it is “definitely committed” to at 30 June 2014 and has passed an appropriate resolution to approve the payment. The director is not required to include the fees in their taxation return until the 2014 year when the amount is actually received.

Staff Bonuses and Commissions. A business can claim a tax deduction for staff bonuses and commissions that are owed and unpaid at 30 June 2014 where it is “definitely committed” to the expense.

Repairs and Maintenance. A deduction can be claimed for repairs undertaken and billed by 30 June 2014 but not paid until the next income year.

Maximising Depreciation Claims for Non-SBE Taxpayers

An immediate deduction can be claimed for assets costing less than $100 GST inclusive (e.g. minor tools).
A tax deduction can be claimed for depreciable assets that are scrapped or sold for less than their written down value.
Assets costing less than $1,000 GST exclusive can be allocated to a “low value pool” and depreciation claimed of 18.75% for 2010 (37.5% thereafter) regardless of when the assets were acquired during the income year

Valuing Trading Stock

Both SBE and non-SBE taxpayers have the option of valuing trading stock on 30 June 2010 at the lower of actual cost, replacement cost, or market selling value. Furthermore, this valuation can be applied to each item of trading stock.

For example, where the market selling price of stock items at year-end is below the actual cost price, the taxpayer can generate a tax deduction by simply valuing the stock at market selling value for tax purposes.

In situations where stock has become obsolete at year-end, the taxpayer may elect to adopt a lower value than actual cost, replacement cost, or market selling value.

Deferring Income & Capital Gains

Businesses that return income on a cash basis are assessed on income as it is received. A simple end of year tax planning strategy is to delay “receipt” of the income until after 30 June 2014.

Businesses that return income on a non-cash basis are generally assessed on income as it is derived or invoiced. Income may be deferred in some circumstances by delaying the “issuing of invoices” until after 30 June 2014.

Realising a capital gain after 30 June 2010 will defer tax on the gain by 12 months and can also be an effective strategy to access the 50% general discount which requires the asset to be held for at least 12 months. The date of the contract is the realisation date for capital gains tax purposes.