TAX PLANNING FOR THE YEAR ENDED 2018

As the financial year end approaches, it is time to start considering what actions can be implemented to reduce income tax.

Small Businesses

Reduce Income

• Deferring income to next financial year (receiving income after Financial Year 18 ends for cash basis businesses; or invoicing customers after Financial Year 18 ends for accrual basis businesses)

Increase Expenses

• Prepay expenses up to 12 months.
• Utilising the $20,000 instant assets write off scheme.
• Write off bad and doubtful debts.
• Extra contribution to your Superannuation fund.*
• If you work from home, you may be eligible to claim home office expenses.
• Choosing a lower stock closing value to minimise current year’s taxable income (cost); or a higher closing value to minimise next year’s taxable income (market value).
• write off obsolete stock.
• Assets purchased and are ready for use by 30 June 2018 and cost for more than $20,000 can be depreciated at 15% in the year ended 30 June 2018 and 30% in subsequent years.

Also, it is crucial to remember superannuation expenses and must be paid before it becomes tax deductible.

Individuals

• Professional fees/Union fees.
• Telephone expense used for business.
• Interest on loan for investment properties/share investment (prepayment of interest expense of up to 12 months can be deductible)
• Rental expenses in relation to investment properties – please note travel expenses in relation to rent collection, property inspection and maintenance will not be eligible for a tax deduction.
• Business related professional subscriptions.
• Protective or occupation specific clothing.
• Home office expenses.
• Self-education expenses.
• Sunscreen and sunglasses – only for outdoor workers.

* Personal superannuation contributions can be made for additional tax deductions for individuals/sole traders under 75 (provided that you have met the work test for individuals aged between 65 to 74), previously the 10% rule applied where employment income must be less than 10% of your total income in order to make additional super contributions. However, please note this contribution is treated as a concessional contribution and the concessional contribution cap for Financial Year 18 is $25,000 (This cap includes what your employer contributes).

Please feel free to contact us if you have any questions or are interested in hearing more about tax planning on (03) 8677 0633