WHAT YOU CAN DO NOW TO MINIMISE YOUR TAX
We encourage our clients to do this well before 30 June 2023 to allow enough time to implement the relevant tax saving strategies. The sooner we start planning the better!
PAY EMPLOYEE SUPERANNUATION NOW
Get your contributions in before 30 June. To claim a tax deduction in the 2023 financial year, you need to ensure that your employee superannuation payments are received by the super fund by 30 June 2023.
You should avoid making last-minute superannuation payments as processing delays may cause them to be received after year end.
The key date for making contributions is not when you make the payment, but when it’s received by your super fund. Even though many banks and financial institutions now offer instant payments, electronic fund transfers and BPAY can take a number of days to appear in your super account, so make sure you send off your payment well ahead of the deadline
CONTRIBUTE TO SUPER
Top up your voluntary superannuation contributions. Remember, you can contribute up to $27,500 in deductible super contributions each year.
DEFER INCOME
If possible, defer issuing further invoices and receiving cash/debtor payments until after 30 June 2023. This strategy will be effective for companies who have a high income one year and expect it to be lower the next or seasonally different. So just push out invoices until next financial year and save tax this year.
WRITE OFF BAD DEBTS
Businesses should review their debtor’s ledger prior to 30 June 2023 and establish whether any of their customers’ debts are unrecoverable. If this is the case, the tax deductions can be claimed for the ‘write off’ of bad debts. GST adjustments can also be made for the write-off of bad debts in the June 2023 Business Activity Statement.
PREPAYMENTS
“Small Business Concession” taxpayers can make prepayments (up to 12 months) on expenses (e.g. Loan Interest, Rent, subscriptions) BEFORE 30 June 2023 and obtain a full tax deduction in the 2023 financial year. Certain expenses have maximum prepaid terms, so be sure to maximise your position before the year’s end. Prepayments could free up cash flow later in the year and reduce your taxable income this year.
TAKE ADVANTAGE OF THE $150,000 INSTANT WRITE OFF BEFORE IT FINISHES
This enables you to immediately deduct the business assets you purchase from your assessable tax, both new and used.
BRING FORWARD EXPENSES
Purchase consumable items BEFORE 30 June 2023. These include marketing materials, consumables, stationery, printing, office and computer supplies. Spend the money now and get the deduction this year. If you’re going to buy it in July or August, why not get it earlier or buy in bulk, especially if you have great cash flow and profit this year. Improve your cash flow next year if you expect it to reduce and free up cash flow by having prepaid various expenses.
REPAIRS & MAINTENANCE
Make payments for repairs and maintenance (business, rental property, employment) BEFORE 30 June 2023. If you’re looking at your Rental Property or business and it is in need of a lick of paint or some basic upgrades, now might be a great time to take advantage if you’re income is higher this year more than normal.
OBSOLETE PLANT & EQUIPMENT
This should be scrapped or decommissioned prior to 30 June, to enable the book value to be claimed as a tax deduction.
DEFER INVESTMENT INCOME & CAPITAL GAINS
If possible, arrange for the receipt of Investment Income (e.g. interest on Term Deposits) and the Contract Date for the sale of Capital Gains assets, to occur AFTER 30 June 2023.
The Contract Date is generally the key date for working out when a sale occurred, not the Settlement Date! If you get a bonus or have a higher income this year, then try and ensure you can reduce your income by deferring other income items until next year as well.
YEAR END STOCKTAKE / WORK IN PROGRESS
If applicable, you need to prepare a detailed Stock Take and/or Work in Progress listing as at 30 June 2023. Review your listing and write-off any obsolete or worthless stock items.
Talk to us about your different options for valuing Stock, and how they affect your tax payable.