As a business owner, you don’t want to spend more tax than is necessary. It is also best to avail the services of the accountants, like Accountants Cherry Black, for consultations and proper tax filing. Yet, consider these top 10 tips from business tax accountants to help you get the best of tax deductions and refunds.
1. If possible, your taxable income should be deferred until the following financial year. The income receipt can be delayed by cash based businesses while invoicing can be deferred by non-cash operations.
2. Take advantage of a tax deduction by writing off old plant or stock before 30 June.
3. For year end expenses incurred but not yet actually paid by 30 June, claim an immediate deduction.
This includes employee salaries and wages earned but not paid by 30 June. In addition, staff bonuses also qualify for a tax deduction when it is a definite expense that the business has committed to.
Any maintenance and repairs are also tax deductible if billed and undertaken before the end of the tax year.
4. Instead of paying full income tax at 46.5%, split the income as company (30%) or lower taxed spouse (16.5% or 0%).
5. Physically write off the business’s bad debt before 30 June. This can only be done if you have proof that you have have genuinely attempted to recover the debt. Also, the debt has to have been shown as income before being written off.
6.Small Business Entity (SBE) concessions are available for businesses with a turnover of less that $2 million.
For example, prepaying expenses like interest, insurances, rent, subscriptions, rent and lease payments enables an immediate deduction.
7. Don’t get caught in the trap of spending money simply to qualify for tax deductions. Remember, you will only receive 30% back if you are a company held business.
8. Pay your employee superannuation contributions by 30 June in order to be eligible for the tax deduction of that financial year.
9. Before the end of the financial year, repay any interest and principal on any loans borrowed from your company. If you don’t, the entire loan amount will be taxed at the much higher marginal rates. This may include using company assets like vehicles for private use.
10. Finally, in the event of a tough financial year, you can vary the PAYG instalment for the last quarter of the financial year.