Many of our business clients like to review their tax position at the end of the income year and evaluate any year-end strategies that may be available to legitimately reduce their tax.\u00a0\u00a0 Traditionally, year-end tax planning for small businesses is based around two simple concepts \u2013 i.e., accelerating business deductions and deferring income.<\/p>\n
However, Small Business Entities (‘SBEs’) have greater access to year-end tax planning due to particular concessions that only apply to them (the SBE system replaced the previous Simplified Tax System (‘STS’) on 1 July 2007).\u00a0 Taxpayers that qualify as an SBE can generally pick and choose which of the concessions they wish to use each year (although see below regarding the simplified depreciation rules).\u00a0 The basic requirement to be eligible for the SBE concessions is that the business taxpayer’s annual turnover (including that of some related entities) is less than $2 million.<\/p>\n
The following are a number of areas that may be considered for all business taxpayers.<\/p>\n
Maximising deductions for Non-SBE business taxpayers should endeavour to maximise deductions by adopting one or more of the following strategies:<\/p>\n Prepayment strategies \u2013 non-SBE<\/span><\/strong><\/p>\n Any part of an expense prepayment relating to the period up to 30 June is generally deductible.<\/p>\n In addition, non-SBE taxpayers may generally claim the following prepayments in full:<\/p>\n \u2013\u00a0\u00a0\u00a0 expenditure under $1,000;<\/p>\n \u2013\u00a0\u00a0\u00a0 expenditure made under a ‘contract of service’ (e.g., salary and wages); or<\/p>\n \u2013\u00a0\u00a0\u00a0 expenditure required to be incurred under law.<\/p>\n Prepayments can be a little confusing, so before you commit to making a payment please feel free to call us with any queries or assistance if required.<\/em><\/p>\n Accelerating expenditure \u2013 non-SBE<\/span><\/strong><\/p>\n This is where a business taxpayer brings forward the expenditure on regular, on-going deductible items.\u00a0 However, business taxpayers are generally entitled to deductions on an ‘incurred basis’.<\/p>\n Therefore, there is generally no requirement for the expense to be paid by 30 June 2016.\u00a0 As long as the expense has genuinely been ‘incurred’, it will generally be deductible.<\/p>\n Checklist<\/strong><\/p>\n The following may act as a checklist of possible accelerated expenditure:<\/p>\n Depreciating assets costing less than $1,000 can be allocated to a low value pool and depreciated at 18.75% (which is half of the full rate of 37.5%) in their first year regardless of the date of purchase.<\/p>\n \u00a0 Accrued expenditure \u2013 non-SBE<\/strong><\/p>\n Non-SBE taxpayers (and some SBE taxpayers) are entitled to a deduction for expenses incurred as at 30 June 2016, even if they have not yet been paid.<\/p>\n The following expenses may be accrued:<\/p>\n Maximising deductions for <\/strong> Deductions can be maximised for SBE business taxpayers by accelerating expenditure <\/strong>and\u00a0 prepaying <\/strong>deductible business expenses.\u00a0 Former STS taxpayers who have continued to use the STS cash method since before 1 July 2005 cannot accrue expenses, but other SBE taxpayers on an accruals basis can<\/em> accrue expenses (see above regarding accruing expenditure).<\/p>\n Accelerating expenditure \u2013 SBE<\/strong><\/p>\n Former STS taxpayers who have continued to use the STS cash method since before 1 July 2005 and who qualify as an SBE are generally only entitled to deductions if they have paid<\/strong> the amount by 30 June.<\/p>\n All SBE taxpayers can choose to write-off depreciable assets costing less than $20,000 in the year of purchase*.\u00a0 Also, assets costing $20,000 or more are allocated to an SBE general pool and depreciated at 15% (which is half the full rate of 30%) in their first year.\u00a0 Therefore, where appropriate, SBE business taxpayers should consider purchasing\/installing these items by 30 June 2016.<\/p>\n (*) The small instant asset write-off threshold has been temporarily increased to ‘less than $20,000’, for assets acquired and installed ready for use between 7.30 pm (AEST) 12 May 2015 and 30 June 2017.\u00a0 <\/em><\/p>\n It should be noted that SBE taxpayers choosing to use the SBE depreciation rules are effectively ‘locked in’ to using those rules for all of their depreciable assets.<\/em><\/p>\n Prepayment strategies \u2013 SBE<\/strong><\/p>\n SBE taxpayers making prepayments before 1 July 2016 can choose to claim a full deduction in the year of payment where they cover a period of no more than 12 months (ending before 1 July 2017).\u00a0 Otherwise, the prepayment rules are the same as for non-SBE taxpayers.<\/p>\n The kinds of expenses that may be prepaid include:<\/p>\n Information Required<\/span><\/strong><\/p>\n This is some of the information we will need you to bring to help us prepare your income tax return:<\/p>\n Many of our business clients like to review their tax position at the end of the income year and evaluate any year-end strategies that may be available to legitimately reduce their tax.\u00a0\u00a0 Traditionally, year-end tax planning for small businesses is based around two simple concepts \u2013 i.e., accelerating business deductions and deferring income. However, Small…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":["post-13933","post","type-post","status-publish","format-standard","hentry","category-news"],"yoast_head":"\n
\nnon-SBE taxpayers<\/span><\/strong><\/p>\n\n
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\n SBE taxpayers<\/strong><\/p>\n\n
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