The final count down has started! With June 30 2019 just around the corner business owners should be taking the opportunity to make the most of tax effective strategies for their business.
Here are a few tips for those savvy business owners out there who want to make every dollar count. The below points are just a summary, to implement any of these tips, make sure you download and follow the step-by-step 2019 EOFY Tax Tips – Business Guide.
Write Off Bad Debts
Tip: If you are not going to be paid for overdue invoices you might as well at least claim a tax deduction for them.
Tip: Stock can be valued at the lower of cost, replacement, or net realisable value. So, consider reducing the value of old stock to its ‘net realisable value’ instead of its original cost. Also consider writing off any stock that is damaged or obsolete.
Superannuation – Employees
Tip: Superannuation is only tax deductible when it has been paid. The superannuation for the June 2019 quarter is due 28 July 2019. For the sake of 28 days, you might as well pay the super in June instead of July and therefore claim a tax deduction for it.
Superannuation – Employers
Tip: Saving for retirement, or on a high tax rate with plenty of surplus cash? Consider maximising your concessional (tax deductible) contributions into superannuation.
Instant Asset Write-Off
Tip: Stop to sharpen the saw! Can you increase productivity by upgrading some of your old equipment? If you can increase an employee’s productivity by 20% by purchasing a new machine or computer for them, how long will it take you to obtain a return on investment?
Are there any old vehicles or machines which are costing you a lot in repairs and maintenance in addition to hassle and down time?
Utilise this generous incentive to increase business efficiency and reduce your tax for the 2019 financial year.
Review Depreciation Schedule
Tip: Check to see if obsolete plant and equipment is sitting on your depreciation schedule. Rather than depreciating a small amount each year, if the equipment has become obsolete, scrap it and write it off before 30 June.
The review may alert you as to other items which require replacement e.g. old computers or other equipment.
- upgrading these prior to 30 June
- claiming the instant asset write-off on the new asset
- claiming the tax deduction on the write-off the old asset.
FBT & Vehicles
Tip: Minimise FBT related adjustments by reviewing vehicles. Ensure that logbooks have been completed for all cars with significant business use e.g. sales rep vehicles.
Consider FBT exempt vehicles for employees with minimum private use apart from travel to & from work.
Paying Out Employee Entitlements
Tip: Cashflow’s not an issue and you still want to reduce your tax even further? Consider offering long standing employees the opportunity to cash out some of their annual leave entitlements.
To implement any of these tips, download our step-by-step 2019 EOFY Tax Tips – Business Guide.
Quantum Advisory is a business accounting and advisory firm that empowers family businesses to step up, scale up and sell up. Visit www.qagroup.com.au or call 1300 700 711 and start the journey.