Be Prepared for EOFY! 

The end of financial year (EOFY) will be here before we know it. If you've been putting off tax planning, now is the time to act. 

Tax Planning

Small Business


Generally there are 2 ways to minimise tax liability at this time:


  1. Consider the timing of trading income and capital gains transactions close to the end of year. 
  2. Bring forward expenditure. For small businesses, some examples are:


  • Write off bad debts before 30 June;
  • Ensure all superannuation contributions are paid up to date (including personal contributions if self-employed);
  • Purchase necessary plant and equipment (which can be immediately written off if under $20,000);
  • Prepay expenses for services 12 months in advance e.g. insurance (there are limitations to this so please check with us first);
  • Review valuations of trading stock as at 30 June.

Some significant concessions will end at 30 June 2017, most notably:


Small business accelerated depreciation – small businesses buying plant and equipment items with a value less than $20,000 can still claim a full write-off of the purchase in the 2016-17 financial year. This concession is on a per asset basis, so several assets each costing less than $20,000 would qualify. After 1 July, the threshold will revert to $1000. Some assets are excluded – for more details check with Lionel or Tony.

Individuals


Tax planning strategies for individuals include the following:



  • defer interest on investments e.g. set term deposits to mature after 1 July
  • consider realising capital losses if you have already realised capital gains on other assets during the year
  • consider salary sacrifice strategies 
  • ensure any deductible donations are made before 30 June and in the name of the higher income earner in the household
  • consider ownership structure for income producing assets to ensure positive cash flows to the lower income earner and negative cash flows to the higher income earner
  • maximise motor vehicle deduction claims if you use your own vehicle for work purposes - generally this requires keeping a logbook for 12 continuous weeks - now is the ideal time to start. There are complex rules surrounding this - please contact us for advice. 

Primary Producers



Tax Planning for primary producers include:

  • if you expect a long term reduction in income, consider withdrawing from the income averaging system. From the 2016-17 tax years primary producers will be eligible to access income averaging ten years after choosing to opt-out, instead of that choice being permanent.
  • consider the use of farm management deposits before the 30 June. Primary producers experiencing severe drought conditions are allowed to withdraw an amount held in an FMD within 12 months of making the deposit without effecting the income tax treatment of the FMD in the earlier year. The limit on FMD's has been raised to $800,000 per individual and an FMD can now be sued to offset debt.
  • consider capital expenditure items with immediate or accelerated depreciation allowance, such as fodder storage, fencing for land care and water facilities. 

Trust Distributions


If your operating entity structure is a trust, then it is essential that you adopt a trust distribution resolution before 30 June 2017. Tax planning for trusts should be completed as soon as possible to ensure the resolution can be documented prior to 30 June.



The above tax planning strategies must take into consideration your individual circumstances as many technical conditions can apply. Please contact us for advice. 

Funny HAHA?



An accountant is reading nursery rhymes to her young child. When she is finished, she answers her son's question: "Well son. Little Bo Peep's lost her sheep, might not be tax deductible - but I like your thinking." *


*This is general advice - Whilst we believe the information to be true to the best of our knowledge, we accept no liability regarding the funniness of the joke, accuracy of this information or any loss incurred by any person or company who relies upon the information in this joke."


If you have any questions, comments, suggestions, please don't hesitate to contact us at any time. We look forward to hearing from you.


Kind Regards


The Team
Walsh Accounting
www.walshaccounting.com.au

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