In 2013 and 2014 we produced some tips on tax planning and this helped a number of our business clients have a very profitable 2014/2015 year. With the new budget changes and the financial year coming to a close, start 2015/ 2016 year with a bang.
We would suggest you meet our accounting and tax specialists throughout the year to ensure proper tax planning and budget forecasting as this can ensure you have a successful business. The cut off and last chance to help a business successfully is the beginning of March so that we have plenty of time to address any concerns and help you achieve Peace of Mind.
With all the changes the government is making tax wise, the next next quarter and new financial year looming, the increasingly sophisticated data matching activities that we let you know about here, it is important you take this opportunity to book a tax planning appointment with one of our team now.
One of the ways to manage your tax is to delay the recognition of income. Whether you recognise money coming in at receipt (cash) or invoicing (accrual) by delaying the invoicing or receipt of moneys you can defer the taxation point to the following tax year.
You may have recognised income from debtors previously and have taken great lengths to get paid for the work you have done. If you have had no success, you are able to claim the bad debtors as a deduction, including any costs associated with chasing the debt.
The GST is also reversible now, and if you have had bad debtors, speak to us so we can assist referring you to one of our strategic alliance or write the debt off if required.
With the new budget changes, if your business turns over less than $2 million, your business can claim an immediate tax deduction for as many assets up to the $20,000 purchased between 7:30pm on budget night and June 30, 2017, rather than having to claim those purchases as deductions spread over several years. This is a huge increase from the current instant asset write-off threshold of $1,000. If the value of your pooled assets is below $20,000 it can be immediately deducted too.
There are a few items not deductible, including some horticultural plants and any software developed in-house by a business. Software purchased for business use, for example, an account-keeping program, can be claimed.
We are also asking all of our clients to discuss any purchases with us as the ATO will closely monitor the number of Australian Business Number (ABN) applications received to make sure no-one is attempting to rort the scheme.
The R&D tax incentive provides an incentive of up to 45% on eligible R&D expenditure undertaken by companies. Companies with income of less than $20,000,000 can have this incentive paid to them as a refund if they are in tax losses. You don’t even have to pay tax to obtain the benefit.
If you have expenditure for R & D and are holding off putting it through, put it through now, to get the benefit before the 30th June 2015.
Ensure you have a good filing system in place. A really good way to track your expenses is to have electronic files. Paper receipts can fade or get lost or tear. If you have a smart phone or a scanner take a photo of the receipt and then name and file the photo or scanned image for easy access. A good idea would be to sort the images on an online service like Dropbox or iCloud so they can’t get lost or destroyed.
If you are unsure, it may be worth a quick phone call to us. In simple terms it is better to pay off your loans that have no tax implications. That is, loans used to purchase personal items not for investment/ business purposes like furniture and holidays.
It may be time to review your interest rates. In principle, you should be getting the lowest rate on items that aren’t tax deductible and minimise non-deductible interest. If you are unsure the rate you are getting is the best, don’t hesitate to call us and we can refer you to one of our mortgage brokers.
We recently had an experience where a client had used a quantity surveyor which was cheaper to value their investment property. As a result, the client missed out on higher depreciation/ write offs not only for the 2014 year but also every year after that!
Where this is concerned, look for overall value. We were told recently by one of the companies that a good test to determine if you are missing out on valuable deductions is to look at the value for your hot water service. If the value they put on the report is less than $1,300 it is likely you are not being tax efficient.Give us a call if you are unsure.
If you have never used a quantity surveyor before, now is the time to action, as you can back date deductions for the last two tax years.