Ah yes EOFY for your small business – not the most exciting time of year but with some savviness you could wipe thousands off your tax bill if you squeeze every benefit form the system. How?
1) 20,000 instant asset write off
Remember this budget win? We wrote a comprehensive blog, ‘How exactly do you use the $20,000 tax offset‘ on the extended scheme to help you decide if and how to use it. Check it out for full details on how your business can use it, or tactically decide not to use it, depending on your business circumstances. If you are in the camp that would benefit from new machinery or business related equipment, make sure to get your tax benefit and chat to your bookkeeper if unsure as it could be a massive tax win for you.
2) Write off bad debts
Tally up your bad debts through the year, debts that remain unpaid to your business, ensure you have records and evidence to support your claims and write these off before June 30 sharp to claim a decent deduction. Be sure these debts were originally entered as ‘income’ to be eligible. You should also include board meeting minutes etc. that specify the nature of the bad debt and detail the agreement to deem it reasonably so.
3) Pay into super
One of the best legitimate ways of reducing your tax is to volunteer super payments. Small business owners have the choice of getting their business to contribute up to $25,000 into super (including any super guarantees), taxed at 15% within the fund, then claim a deduction for the super contribution. If you do this, be sure the funds are held in the nominated super account before June 30.
4) Obsolescence is your friend
Old unusable stock or equipment you can’t sell or has become obsolete? It would be smart to look into writing this off. You will need evidence you tried to sell it or notes describing its obsolescence to the business. Writing such stock off will recoup some of this loss. Be sure to enter these write offs into your accounting software before June 30.
5) Your bookkeeper is an even better friend
When it comes down to it, relying on your own information and online guides will only go so far and with such a transient landscape, tax law is forever evolving. Your absolute best bet for reducing tax, exploiting all loopholes available and ensuring you are compliant with Australian law is looking to the double edged sword of smart accounting software and an attentive bookkeeper. Don’t avoid them and don’t wait too long, a simple meeting and a look through your accounting software records should be sufficient for you to gain a commanding knowledge of how you can pay the least amount of tax possible.
The contents of this blog is of a general nature and for guidance only. Reckon do not provide professional advice. Viewers should consult with a professional adviser for advice on their specific circumstances.