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.
In this EOFY special, we’ve summarised the ‘key ingredients’ to maximise your available deductions as an individual or business.
- > Donations are tax deductible. Make sure you keep the receipts for donations to approved charities.
- > For any capital assets disposed of during the year (such as a rental property or shares) ensure you offset these against any capital losses to reduce your net capital gain. In addition, ensure you claim the 50% capital gains discount on assets held over 12 months.
- > Consider the benefits of deferring your assessable income to the 2020 income year.
- > In limited circumstances, an immediate deduction is available for non-business prepaid expenses Prepay interest to get the deduction in this year.
- > 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 2019 and claim the premiums this tax year. If you already have income protection, ensure your premiums are paid prior to 30 June.
- > 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?
- > 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.
- > Deductions for personal superannuation contributions are available for all individuals under the age of 75. Maximise Employer/Personal superannuation contributions up to the cap of $25,000 and make sure they reach your super fund by 30 June 2019.
- > For non-concessional (personal after tax) super contributions the cap for 2018/19 income year is $100,000.
For all business
- > Make sure you conduct stocktake before year end to identify obsolete items.
- > Write off bad debts prior to June 30 to get a refund of GST charged on the original invoice (if registered on a non-cash basis).
- > Make sure you consider any upcoming liabilities and whether to incur them before year end.
- > If you have less than 20 employees, make sure you have registered for STP (single touch payroll) by 30 June 2019 and that your PAYG payment summaries are provided to your employees by 14 July 2019 and lodged with the ATO by 14 August 2019. Check with us for details.
- > If you have more than 20 employees, you should have registered for STP by now – if not we can step you through this.
- > Employer 9.5% super contributions are deductible in 2019 financial year only if the funds are in the super funds bank account by 30 June 2019. (including the June 2019 quarter).
- > You may be able to reduce the amount of your remaining tax instalments for the 2018/19 year by varying your June PAYG tax instalment, providing you with a cash flow advantage while you wait for your refund.
- > Unutilised excess franking credits in a company may be carried forward as a revenue loss. Check with us for details.
- > 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.
- > 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.
- > 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.
- > Have you considered the timing of income in regard to work in progress, sales income and the date of entering into a contract for the disposal of CGT assets?
Small business concessions planning
If your entity qualifies as a small business and you were looking at acquiring any business assets (plant, equipment, motor vehicle etc) under $30,000, do so prior to 30 June 2019.
- > 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’re a small business, make sure you use the concessions available to reduce your capital gains tax.
Superannuation – Including Self-Managed Superannuation Funds (SMSF)
All current year contributions must be received before 30 June. The concessional (tax-deductible) contributions cap for the 2019 financial year is $25,000 (this includes salary sacrificed amounts); while the non-concessional contributions cap is $100,000. Members under 65 may be eligible to contribute up to $300,000 in non-concessional contributions in one year.
Government Superannuation Contributions
Under certain circumstances, the Government will contribute 50 cents for each $1 of your non-concessional contribution to a maximum of $500 made to your SMSF by 30 June. To receive the maximum co-contribution of $500 this year, your total income must be less than $37,697. The co-contribution progressively reduces above this amount and then cuts out completely at $52,697.
Low Income Superannuation Tax Offset
If you earn less than $37,000 and either you or your employer have made contributions into your SMSF, you could be entitled to a refund of 15% contribution tax (up to $500) paid by your SMSF. To receive the refund, you must ensure the contributions are received by your SMSF by 30 June.
Minimum Pension Payments
If you are accessing an Account Based Pension from your SMSF, make sure that the minimum amount required to be paid under superannuation law is paid from your SMSF by 30 June in order for your SMSF to receive tax exemptions. The minimum amount is determined by your age and the percentage value of your pension account balance at either the commencement date of the pension or 1 July each year. There is no maximum pension payment amount required.
From 1 July 2019, super accounts that have been inactive for 16 months will have their default insurance cover switched off. The change means members will need to elect to “opt-in” and retain the insurance, or reactivate the account by making a contribution.
From 1 November 2019, the ATO will be given the authority to consolidate super accounts (other than SMSFs) with a balance below $6,000. Your SMSF may receive a rollover as a result of the consolidation process.
For further information, contact an MWM Advisory team member atmwmadvisory.com.au/contact.