- Claim everything you are entitled to: Make sure you know what you can claim. For example if you are on the road for work (or work outside) you can claim sunscreen so if your foundation, lip-balm or moisturiser has an SPF factor then you may be able to claim it. You can also claim home office, internet, travel, training, handbags, food when travelling overnight and so much more.
- Get on the cloud: Once upon a time you had to keep every paper receipt tucked away in an envelope in an overstuffed filing cabinet. Now you don’t need to keep paper receipts and all of your deductions can be stored safely in the cloud. If you’re a business you might want to consider a cloud based solution such as Xero, Quickbooks or MYOB. PRO TIP: list coffee shop visits and lunches etc as client meetings or gift instead of staff gift to avoid fringe benefit tax.
- Pay for deductions prior to 30 June: This one seems obvious but every year I meet so many people who simply forgot about buying a new computer, upgrading their mobile phone or making a donation until after 1 July when it’s too late.
- Small business concessions. If your turnover is less than $10million you can write-off in full any asset that costs up to $150,000, pool assets and use simple inventory valuation methods. Note: On 9 June 2020, the government announced it will extend the $150,000 instant asset write-off until 31 December 2020. This proposed change is subject to the parliamentary process and is not yet law. Don’t let your accountant be lazy.
- Delay invoicing before 30 June: If you know that a customer pays you promptly and you will receive the money before 30 June then delay invoicing until 1 July.
- Incur Expenses: Many small business owners think they need to pay for an expense to receive a tax deduction but all you need to do is incur it (or receive the bill dated prior to 30 June). So order any equipment, stationery, materials you need and make sure you receive the bill dated on or before 30 June
- Prepay expenses: If you’re a small business you might consider prepaying expenses such as rent or insurance up front to twelve months.
- Stock on Hand: If you have slow-moving stock then consider writing it off prior to 30th For the rest of your stock, you have the choice of valuing it at actual cost, replacement cost or market value so make sure you choose whichever will give you the lowest price.
- Pay super: If you have staff, pay their superannuation before 30thJune to receive a tax deduction this year and pay super for yourself.
- Revisit your Structure: Is your business in the most tax effective structure? If you are a sole trader then you have no choice but to pay tax on all the profits of the business whereas this is not the case for other structures such as partnerships, companies or trusts. There’s also asset protection implications that are worth considering for changing structure and while insurance can protect you, trading via a company or trust can provide another layer of protection.
- Logbooks: Make sure your log books are up to date. For cars this means your log book needs to be less than five years old. If you’re in a Company or Trust structure and you own cars in that entity, consider keeping a log book on those vehicles now thanks to changes to FBT which means the number of kilometres travelled is now irrelevant to the percentage your FBT is calculated on. A 20 per cent flat rate applies when calculating a car fringe benefit regardless of how many kilometres the vehicle travels annually.
- Consider the year ahead. If you know that next year you’re going to drop income because you’re going on maternity leave, plan to travel or stop getting covid-19 government stimulus like job keeper, it may be worthwhile to prepay expenses while your income is higher this month. Ie. Prepay travel, insurance, interest on equipment loans or software like clickfunnels, dropbox and Active Campaign up to 12 months.
- If you sold your business this year it’s incredibly important to tax plan NOW! You may be entitled to capital gains concessions, but you need to trigger some of them before 30 June.
- Family Trust Resolutions. It’s now mandatory for discretionary trusts to have a written trustee resolution before 30 June showing the intended distribution of income to family members.
For further ideas on deductions you maybe eligible for – also check out my tax tips blog from last year
