At this time of year one of the things foremost on the minds of business owners and managers is “What can I do before 30 June to save tax”? To answer this we have compiled a list of five (5) simple things every business can do.
Before making any decision to follow these tips, please speak with your accountant (which is hopefully us) and make sure they are right for you.
- Look to bring forward expenses into the current financial year that you know you are going to incur next year. Think about things that are going to have to be done in the first couple of months of the new financial year. Are you able to do them now? Examples include general maintenance on equipment such as computers, stationery and office supplies, advertising, subscriptions costs.
- Consider whether it is appropriate to upgrade or purchase new equipment. This somewhat follows on from the first tip, particularly for small businesses. Small businesses that choose to use the small business depreciation method (also known as pooled depreciation) can purchase new equipment and claim 100% of the cost if it is less than $1,000 or 15% for items costing more than $1,000. Given it is currently late in the 2012 financial year, this means that on larger items you could effectively claim 45% of the cost in a little over 12 months!
- Pay your employee’s super before 30 June. Employees superannuation entitlements can only be claimed by an employer once they have actually been paid to an appropriate super fund. Most employers will pay the contributions for April to June in July. However, if they are paid before 30 June they can be claimed now rather than having to wait another year.
- Consider paying expenses in advance. If you have any subscriptions or ongoing arrangements such as memberships or maintenance agreements, it can be worthwhile considering paying up to 12 months in advance. You can generally claim up to 12 months worth of pre-payment immediately.
- Scrap obsolete stock and equipment. Many businesses that have stock have some they simply can’t sell for whatever reason. By physically writing it off before 30 June, it won’t be included in your closing stock at 30 June, effectively granting you a deduction as trading stock can be valued at either actual cost, replacement cost or market selling value and you get to decide which is appropriate for each item.
