The better informed and prepared you are this EOFY, the lower your stress levels and tax bill will be. Here are 7 top tax tips from ConX:
1. Can I expense that trip to Bali?
The ATO are getting stricter when it comes to work-related tax deductions, including travel expenses and meals. Make sure you’re clued up to what is OK and don’t go crazy spending for the sake of it. At the end of the day, the money is coming out of your profits, regardless of whether it is tax free or not.
*That trip to Bali to check out the local building materials (read: when the surf was pumping) just might not make it over the line.
2. Bad debts
Write off any bad debts that you haven't been able to recoup in the current financial year. Make sure to document what the debts are and the efforts you have made to recover them.
Bad debts must be physically written off before the end of June so get this done today, not a few months down the track when you get around to doing your tax return. If you don't, you might get hit twice having to pay tax on an invoice that never came in.
3. Motor vehicles
You can generally claim expenses for a motor vehicle owned or leased by your business and driven by you or your team, as long as the expenses are incurred as part of the everyday running of the business.
4. Tax rate change
The last 12 months has seen a reduction in the company tax rate from 28.5% to 27.5% for businesses turning over less than $10 million. Make sure you get the full benefit.
*If your turnover is between $10 million and $25 million, you can benefit from this in the 2017/18 financial year.
5. The $20,000 instant asset write-off
In the 2015 federal budget, the government introduced the $20,000 instant asset tax write-off scheme to overwhelmingly positive reception. The popular scheme was due to expire on June 30 this year, however, the federal government used this year’s budget to extend the scheme another financial year.
This is good for motor vehicles, tools, and technology, whether it’s onsite or in the office - Computers, iPads, Drones etc
6. Accelerated deprecation on assets up to $20,000
This accelerated depreciation scheme allows businesses to claim immediate deductions for depreciating assets worth up to $20,000 as long as the asset is purchased and installed before June 30.
*This tax break applies to businesses with annual revenue of up to $10 million.
7. ATO Audits
The last thing anyone needs is an audit from the ATO, which means the inspector comes in and goes through your business affairs with a fine tooth comb. It can happen to the best of us so keep your documents in order and use technology to your advantage. Once you’ve got everything documented, they will be easy to deal with.
Good luck! The goal is to minimise the tax bill whilst keeping stress levels at bay!