Are you and your business ready for June 30?
With June 30, 2012 just around the corner this is the best time to take stock of your tax affairs and engage in proactive tax planning for yourself and your business. It’s also the best time to review your current year goals and start setting next year’s goals. The trouble most people are facing is knowing where to start. So, what should you be considering in preparation for the EOFY?
- Pay Compulsory Super – pay your superannuation guarantee contributions before 30 June 2012; these payments are tax deductible in the financial year that they are paid.
- Pay Bills – ask your accountant what expenses are worthwhile paying before 30 June as certain expenses can also be tax deductible in the year in which they are incurred.
- Delay Issuing Invoices – consider delaying issuing invoices for work that are close to June 30 and issue them in July, thereby deferring the tax until the next financial year (2012/13).
- Small Business Instant Write-Off Of Asset Purchases – review your asset register and determin what items needed to be repalced, including obsolete or damaged equipment. If you are an eligible small business you will be able to obtain an instate write-off for equipment purchsed for up to $1,000 (GST exclusive). However, after July 1, 2012 the immediate write-off threshold increases to $6,500 (GST exclusive), so if you have any equipment purchases over $1,000 but under $6,500 this month you may want to consider holding it off until next month.
- Delay Capital Gains Tax – if you sell investment shares or rental properties, remember that for Capital Gains Tax (CGT) purposes the tax is based on the contract date and not the settlement date. Bear in mind that any investment assets sold and ownership was greater than 12 months they may be eligible for the 50% discount tax incentive.
- Stock Take Preparation – know what your stock take obligations are so you have time to prepare for and carry one out.
- Declare Any Bonuses or Director’s Fees Before June 30 – you are not required to pay these by June 30, but the company must be committed to the payment via a director’s resolution in order for these to be deductible.
- Are Your Books Up To Date? – if not, use this time to get them in order so that your reconciliation are ready for your end of financial year requirements. There are great accounting software both traditional desktop and online versions now readily available and user friendly (including reliable bookkeeping services) that can ensure that this process is as stress free for you and your accountants.
- Business Structures – as tax considerations extend well beyond merely compliance obligations, you should take the time to ensure that your tax affairs are structured in the manner that best suits your needs. The right tax structure will provide the solid foundation on which you can build the rest of your business; and access those certain tax incentives when needed. The structure in which your business is set up will depend significantly on your needs. Each possible structure offers its own advantages and disadvantages. If you think the structure in which you currently run your business may not be the best structure for you, the new New Year is a good time to discuss alternative structures with your tax advisor.
- Take Time To Reflect – it is important to review and reflect on your end of financial year results, even if you’re happy with your results. Did your business achieve what you set out to achieve during the last 12 months? If not, where can your business improve?