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  • #978755
    AS Partners
    • Total posts: 13

    Hi All

    I am sure you have read this in the past however the points below pop up every 30 June so its important you have an understanding of how you can minimise the tax you have to pay each financial year. I reccomend you cantact your accountant if you feel any of the points relate to you.

    1) Pre-pay loan interest – This relates to individuals as well as businesses that have a loan on their balance sheet. You may be able to negotiate with your lender to pay the interest on the borrowings up front, receiving the deduction for the 2013 interest in the 2012 financial year. You can claim up to 12 months up front. Make sure your lender allocates the interest payments correctly as the deduction is only allowed for the interest component, not the principal amount.

    2) Defer income & bring forward expenses – If possible, try to bring forward expenses that you would normaly pay in the following month to now. By bringing forward expenses you may get a better after tax benefit in the current financial year where it is more immediately beneficial, an example of this is superannuation By deferring income into the 2012-2013 financial year defer the tax payable on that income. This will be more beneficial for the 2014 financial year where the company tax rate is reduced to 29%

    3) Review assets – Many businesses don’t review their asset registers each year and are still carrying assets that have been scrapped or obsolete. The remaining balance of these assets can be written off which will increase the deduction you receive.

    4) Do a comprehensive stock take – Stock at the end of the financial year can be valued at either the cost price to purchase or the market value. If you are carrying obsolete stock at 30 June then the value of this stock can be written off.

    5) Bad debts – Review your trade debtors at the end of the financial year for any that are outside your normal terms of trade. If you want to claim for bad debts, remember that they must be bad and written off before the end of the financial year. To do this, the debt must generally have been brought to account as assessable income and you must have given up all hope, and more importantly, all action for recovery. Bad debts cannot be claimed by taxpayers who recognise income on a cash basis.

    6) Prepayments – Most business taxpayers must pro-rata the deduction for prepaid expenses over the period to which the expenditure relates. However, individual non-business and Small Business Entity taxpayers can prepay some expenses up to 12 months in advance provided they meet the prepayment rules

    7) Are you receiving Personal Services Income? – The Personal Services Income (PSI) measures are designed to limit the level of deductions available to certain contractors whether they are operating as a sole trader or through a company, trust or partnership, and to also extend the PAYG withholding rules in such cases. A taxpayer that meets certain specified tests such as the ‘results’ test will be treated as carrying on a personal services business and will be able claim a wider range of deductions. But such taxpayers need to be aware of the ATO’s strict approach to income retention and income splitting.

    Craig Ball ca
    Bentley Partners Accountants
    [email protected]

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