If you run a small business that is set to make a profit this financial year you should consider actioning these simple yet effective ways to reduce your net profit for the year and in turn minimise the income tax payable.
- Deferral of Income – Are there any projects/jobs you are working on leading up to June 30 that could be invoiced to the customer or client after 30 June 2015? This is particularly effective if your forecasted taxable income is to be lower in the 15/16 financial year.
- Prepayment of Expenses – Consider ‘bringing forward’ or prepaying expenses prior to 30 June 2015. This could include pre-paying interest on loans, subscriptions or memberships. If you are a small business entity with a turnover less than $2 million you can claim expenses pre-paid up to 12 months in advance. Again, this strategy is most effective if you are forecasting a lower taxable income in 15/16.
- Write off bad debts – Review your Accounts Receivable ledger and write off any accounts that are irrecoverable. Bad debts are not tax deductible until the debt has been declared bad. Ensure that the necessary steps have been taken to write off any bad debts prior to 30 June 2015.
- Pay all employee 9.5% superannuation guarantee payments owing – Employer superannuation guarantee payments are not tax deductible until the debt has been paid. Make sure that you clear out any liability prior to 30 June 2015.
Along with tax strategy you also need to be prepared for upcoming lodgements that are due and be aware of some changes that take effect for this year. It is much easier to be on the front foot and prepare for these things rather than have them sneak up on you.
- Contractor Reporting for Businesses in the Building and Construction Industry – If you are a business primarily in the building and construction industry and you make payments to contractors for building and construction services you will need to report these payments to the ATO on the Taxable Payments Annual Report by 28/08/2015
- SuperStream/Superannuation Clearing House must be used in 2015/16 – Employers must report all Superannuation Contributions using SuperStream from 1st July 2015. Take action now to ensure you are set up with a Clearing House to ensure you will comply with reporting requirements in the new year.
- 2015 PAYGW Summaries MUST be lodged online – This year disk and flashdrive lodgements will not be accepted by the ATO. Lodgements will only be accepted online. In order to do this you must access to the ATO Portal through your registered Auskey or a registered BAS Agent can lodge the return online on your behalf.
Set yourself up a for a win and prepare now for the end of the financial year!
Keep in mind that all advice contained in this article is general. Should you require tailored advice feel free to contact us at email@example.com