The end of financial year is two weeks away and here I have summarised the VJC Top Year End tax tips that you should have already considered and implemented or rush to do so.

These would have been discussed in your quarterly reviews, the recent Quarter 3 one in particular. So before June 30, make sure you have considered the following steps that reduce your tax payable:

THE POPULAR DEDUCTIONS!

  1. PAY AND PRE-PAY EXPENSES: Of course paying (or accruing) expenses will reduce your tax payable, this includes paying Super and in particular the SGC before June 30. In some cases prepaying insurances, leases and subscriptions can be worthwhile.
  2. BOOST SUPER, SAVE TAX AND CREATE WEALTH!
    Make Super contributions up to the contributions caps (CC) 27.5K this year. Take advantage of the lower tax rates in super and the wealth creations benefits, beware not to exceed the 27.5K cap in total contributions including SGC.

PLUS don’t forget the ability to bring forward unused CC from previous years is applicable this year.

Personal deductible super contributions (PDC) are a more flexible deduction.
Government superannuation Co-contribution
Superannuation balance splitting
Spouse super contributions (a tax rebate for super paid for low income spouse).

  1. WRITE OFF BAD DEBTS and claim a deduction, if you have determined they are not collectable and have some proof this is. This is a prudent step to clean up your books also.
    4.  DEFERRING INCOME! Deferring income (like bringing forward expenses) where possible and legal will reduce your tax payable.

THE MOST POWERFUL DEDUCTION!

  1. Purchase assets for your business, take advantage of the last financial year of immediate 100% asset write off.
  2. There is also a loss carry back measure to take advantage of this year.

THE WISE STEPS! Make it work for you.

  1. Spend from your wish list, all those items you were going to do like business agreements, business or asset restructures etc. now may be a good time to invest in these and claim the expenses and reduce your profit.
  2. PAY LESS CAPITAL TAX ! A capital loss will reduce a capital gain, consider selling your under-performing investments (caution: the reduction is before the 50% discount).

Alternatively sell and apply the 50% discount if the asset has been held for more than 12 months

THE OLD FAVOURITES!

  • Review your income split with your spouse or other related parties, trust distributions are normally considered before 30 June.
  • Pay your salary bonuses and management fees.
  • Repay non-deductible debt first.
  • Bringing forward of deductions and prepaying or deferring income.

OTHER MATTERS TO BE AWARE OF: 

  • Look out for OSR issues like Payroll and Land tax, check your Thresholds!
  • Repay Div 7A loans or make your loan repayment with interest. Don’t forget to implement a written loan agreement if needed.
  • Trust distributions resolution must be effective as at the 30th June.
  • Beware of Personal Service Income (psi) issues

WEALTH CREATION:

  • Speak to your wealth adviser, it may be wise to look at contribution caps and other strategies before June 30.
  • Invest in a wealth plan, it will likely be tax deductible and will very likely return far more than the cost!

DON’T FORGET!

  • Think about your long term plan and make decisions with this in mind.
  • The use of the correct entity is crucial, now and in the future.
  • Lodge your tax return early if expecting a refund and invest the money or repay non-deductible debt

There are many more deductions and rebates available depending on your situation

  • Beware of Part IVA consequences of acting for solely a tax benefit, if it looks too good then it probably is too good, don’t break the law.
  • Beware of acting without advice

Please call if you would like to discuss any of the above and the application to your own situation.

General Advice warning: the information in this article is general in nature, it is not advice specific to your needs. If you want to act upon the information in this article then you should seek advice from a qualified professional. VJC accepts no liability to any party for acting from this information unless they have sought advice in a formal engagement with VJC for this purpose.