In this EOFY special, we’ve summarised the ‘key ingredients’ to maximise your available deductions as an individual or business
For individuals:
- Donations are tax deductible. Make sure you keep the receipts for donations to approved charities.
- Offsetting realised capital losses against realised capital gains to reduce your net capital gain.
- Consider the benefits of deferring your assessable income to the 2019 income year.
- Weigh up the value of incurring up-and-coming liabilities before year’s end.
- If you own a rental property, make sure you’re maximising claims. To maximise your rental property deductions, it is prudent to get a Quantity Surveyor Report. If your property was built after 1980 you get a tax deduction for claiming the wear and tear on the building.
- Don’t have income protection but have a family, home loans and personal investment loans? You may want to get insured prior to 30 June 2018 and claim the premiums this tax year. If you already have income protection, ensure your premiums are paid prior to 30 June.
- In limited circumstances, an immediate deduction is available for non-business prepaid expenses.
- Ensure you have all your relevant documentation in relation to motor vehicle and work related expenses to maximise your claims. Have you prepared a logbook for your vehicle or a diary of work related travel?
- Deductions for personal superannuation contributions are now allowed for all individuals under the age of 75 (including those aged 65 to 74 who meet the work test). Previously, a deduction was only available to individuals whose employment income was less than 10% of their total income. The maximum allowable concessional (deductable) contributions for the year ended 30 June 2018 is $25,000. For the super contributions to be tax deductible in the 2018 financial year, the funds must be in the super funds bank account by 30 June 2018.
For business:
- You may be able to reduce the amount of your remaining tax instalments for the 2017/18 year by varying your June PAYG tax instalment, providing you with a cash flow advantage while you wait for your refund.
- Write off bad debt prior to June 30 to receive an adjustment on GST charged on the original invoice.
- Unutilised excess franking credits in a company may be carried forward as a revenue loss. Check with us for details.
- Make sure you consider any upcoming liabilities and the value of incurring them before year end.
- Talk to us about special considerations for non-commercial losses. There are some ways to make the most of this. As usual, we’re here to answer any questions.
- Make sure your PAYG payment summaries are provided to your employees by 14 July 2018 and lodged with the ATO by 14 August 2018.
- An individual or personal services entity is subject to Personal Services Income (PSI) – limiting deductions available – unless you can show that a ‘results test’ is satisfied. Check with us for details.
- Be careful – if you use assets owned by a company for personal purposes you may breach Division 7A, giving rise to an unfranked dividend for tax purposes.
- The Australian tax Office has extended the Small Business Entity immediate deductable assets scheme until 30 June 2018. If your entity qualifies as a small business and you were looking at acquiring any business assets (plant, equipment, motor vehicle etc) under $20,000, do so prior to 30 June 2018.
To be eligible for the deduction the taxpayer must:
- Have a turnover of less than $10 million, and
- The asset was first used or installed ready for use in the income year you are claiming it in.
- If you or your ‘associates’ borrowed money, received a benefit, or had a debt forgiven from a private company during the year, the Division 7A rules may apply to you.
- If you’re a small business, make sure you use the concessions available to reduce your capital gains tax.
- Make sure you consider the timing of income in regard to work in progress, sales income and the date of entering into a contract for the sale of CGT assets.
- Ensure all employees 9.5% superannuation contributions are paid prior to 30 June 2018 (including the June 2018 quarter). For the super contributions to be tax deductible in the 2018 financial year, the funds must be in the super funds bank account by 30 June 2018.
- Maximise Employer/Personal superannuation contributions to utilise the maximum cap of $25,000. Again, for the super contributions to be tax deductible in the 2018 financial year, the funds must be in the super funds bank account by 30 June 2018.
- The non-concessional contribution cap for 2017/18 income year is $100,000 p.a.
- Make sure you conduct stocktake before year end to identify obsolete items.
- Now is the time to prepare a budget and perform a break-even analysis for your business. Doing so will assist in setting targets and achieving your business goals.
If you’re looking for some advice this end of financial year or would like to invest in our tax planning service, please call 07 5596 9070 today.
