IS YOUR BUSINESS A SMALL BUSINESS ENTITY?
Small businesses can access a range of tax concessions from the ATO. To qualify as a Small Business Entity, the business must have an aggregated turnover of less than $10 million and be operating for all or part of the 2018 year.
REDUCTION IN COMPANY TAX RATES FOR SMALL BUSINESSES
The company tax rate for businesses with less than $10 million turnover is now 27.5%.
INSTANT DEDUCTION FOR ASSETS LESS THAN $20,000
If your business is a Small Business Entity, the following tax concessions apply:
If your business is not a Small Business Entity you will need to depreciate all assets purchased over $300. Any assets purchased for $300 or under can be immediately deducted.
SMALL BUSINESS ENTITY PREPAYMENTS
Small Business Entity taxpayers can make prepayments (up to 12 months) on expenses (e.g. loan interest, rent, subscriptions) BEFORE 30 June 2018 and obtain a full tax deduction in the 2018 financial year.
BRING FORWARD EXPENSES
Purchase consumable items BEFORE 30 June 2018. These include marketing materials, consumables, stationary, and printing, office and computer supplies. Spend the money now and get the deduction this year.
MAXIMISE DEDUCTIBLE SUPER CONTRIBUTIONS
The concessional superannuation cap for 2018 is $25,000 for all individuals. Do not go over this limit or you will pay more tax! Note that employer super guarantee contributions are included in these caps. To claim a tax deduction in the 2018 financial year, you need to ensure that your employee superannuation payments are received by the superannuation fund by 30 June 2018.
If possible, defer issuing further invoices and receiving cash/debtor payments until after June 30 2018. This strategy pushes tax payable into further years.
REPAIRS & MAITENANCE
Make payments for repairs and maintenance BEFORE 30 June 2018.
DEFER INVESTMENT INCOME & CAPITAL GAINS
If possible, arrange for the receipt of Investment Income (e.g. interest on Term Deposits) and the Contract Date for the sale of Capital Gains assets, to occur AFTER 30 June 2018. The Contract Date is generally the key date for working out when a sale occurred, not the settlement date.
MOTOR VEHICLE LOG BOOKEnsure that you have a current log book (completed in the last 5 years). If you need a new log book for the 2018 year it must be kept for at least a 12-week period and the start date for the 12-week period must be on or before 30 June 2018.
PRIVATE COMPANY (“DIV 7A”) LOANS
Business owners who have borrowed funds from their company in previous years must ensure that the appropriate principal and interest repayments are made by 30 June 2018. Current year loans must be either paid back in full or have a loan agreement entered in before the due date of lodgement for the company return.
YEAR-END STOCK TAKE / WORK IN PROGRESS
If applicable, you need to prepare a detailed Stock Take and/or Work in Progress listing as at 30 June 2018. Review your listing and write-off any obsolete or worthless stock items.
WRITE-OFF BAD DEBTS
Review your Trade Debtors listing and write-off all bad debts BEFORE 30 June 2018.
Have your children worked in your business? If they have, ensure you have formalised the arrangement (TFN declarations, etc.) and kept proper records of their work. Genuine wages to children are taxed at ordinary rates.
Ensure that the Trustee Resolutions are prepared and signed BEFORE 30 June 2018 for all Discretionary (“Family”) Trusts.