|The end of the financial year is only a few sleeps away. It is crucial to be on top of your cash flow and set new goals to be ready for the financial year ahead. It is always good to have good financial habits as this will have positive aspect in the short term and the long term.
In order to be ready for the end of this financial year, initiating the following steps could be of a benefit for your business and/or yourself:
- Pay expenses before 30 June
Buy your workrelated expenses before 30 June. These can include stationery, computer expenses, tools, membership fees etc.
- Investment property
If you own an investment property and you have no property depreciation report it is advisable to get one. The fee for this report is tax deductible and it will include valuable information to reduce your taxable income for this and coming years.
- Personal Superannuation
Given the superannuation changes from 1 July 2017 it is essential to be on top of your end of financial year planning. If you are wanting to claim a deduction this year, it may be wise to make this contribution prior to 30 June 2017. When making these contributions it is important to note that a maximum of $35,000 (for people aged 49 years and over) and $30,000 (for others) can be made. However from 1 July 2017, it will reduce to $25,000 p.a. for everyone regardless of age.
- Changes affecting the Higher Education Loan Program (HELP)
The Government will revise the income threshold for repayment of HELP debt, repayment rates and the indexation of repayments threshold from 1 July 2018. A new minimum threshold of $42,000 (FY17/18 $55,874) will be established with a 1% repayment rate and a maximum threshold of $119,882 (FY 17/18 $103,766) with a 10% repayment rate.
To be able to claim a deduction for super contributions made to employees, ensure the super is paid before the due date for each quarter’s payment. If you want to claim a deduction for super owing in June it is ideal that it is paid before month end in order to obtain the deduction this year.
- Bad Debts
This time of the year is always good to review your receivables/debtors in your business. If you are still chasing invoices from the prior financial year, now is the time to write these off to be eligible for the tax deduction. Note to remember – also make the GST adjustment for these written off amounts.
- Knowing the Small Business Concessions
If you are carrying on a business that meets the definition of a ‘small business’, there are a number of tax concessions available:
– $20,000 Instant Asset Write Off
For assets that cost less than $20,000 an immediate tax deduction may be taken for the cost of the asset in the year the asset is installed and ready for use.
– Immediate deduction for business start-up costs
If a business has incurred professional fees and/or legal fees for starting a business, you may be entitled to an immediate deduction for these expenses.
– Company Tax Rate
In the 2017 financial year the tax rate for a company considered a small business (that has an aggregated annual turnover threshold of less than $10m) has a tax rate of $27.5%. This is a reduction from the 28.5% company tax rate in the previous financial year.
- Reward Your Staff
The end of the financial year can be stressful for some small businesses including their staff. So it can also be a good time for employers to reward their key staff for the contribution and hard work throughout the year. Maybe a lunch or even a cash bonus – this shows your employees that they are valued and appreciated within the business. It may also be a great time to review their KPIs or budgets!
Keep in mind any changes outlined in the Federal Budget must be passed by both the House of Representatives and the Senate. This means any proposed cuts or changes outlined above may not necessarily become law.