With the end of the financial year fast approaching, organisations need to start looking at ways to minimise tax liabilities. While business owners should have strategies in place all year round to reduce tax liabilities, 30 June presents some additional opportunities and is a critical deadline for minimising tax for the financial year. Seven key opportunities to reduce tax liabilities are:
1. Superannuation- The minimum super business owners must pay is 9 per cent of each eligible employee’s ‘ordinary time earnings’.Payments must be made at least four times a year by 28 days after the end of each quarter, including the quarter ending 30 June 2013. Business owners can generally claim a tax deduction for super contributions that are paid on time. However, super is one contribution that can’t be claimed until it is paid so would need to be paid before 30 June to claimit in the 2013 year.
2. Personal super- Like employee super, business owners also need to pay their personal super contributions prior to 30 June to get a deduction.
3. Bad debts- These should be written off prior to 30 June to beeligible for a deduction. Business owners should go through their debtors list and write off anything that is not collectible.
4. Stocktake- A 30 June stocktake is required to determine the correct value of closing inventory and find any obsolete or damaged stock. Business owners can choose to value the stock at cost,replacement or market sale price depending on what is lower. This means that stock that is obsolete or damaged can be written off or reduced in value for tax purposes and claimed as a deduction.
5. Bring forward expenses- Do some forward planning and look at expenditure for the next few months. There may be some expenses that will be incurred but would be better brought forward. Consider items like training, repairs and maintenance or prepaying some interest.The $6,500 instant asset write off commenced in the 2012/13 year, so businesses may consider bringing forward any capital expenditure of less than $6,500 to receive the automatic deduction.
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6. Shareholder loans– Ensure that loans are set up properly or repaid by the end of the financial year to avoid a dividend and some unexpected tax.
7. Trust distributions- If operating a trust, ensure the trustee decides and records how the profit will be distributed prior to 30 June.
30 June presents some additional opportunities and is a critical
deadline for minimising tax for the financial year.