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There are legitimate ways to go about minimizing your business’s tax liability, and some simple tactics to achieve this. These may not suit every business, so check with your tax professional to ensure they are applicable. As plans of action invariably take a while to put in place, some of the strategies may be too late to initiate now, but can certainly be given consideration for a better tax year next year. Delay Buying Assets Business owners can consider deferring the purchase of assets, including new motor vehicles, until next financial year because much larger immediate deductions will be available. In a similar vein, if an asset can be depreciated, consider waiting until after June 30 before purchase, so you will have a full year over which to get the benefits of depreciation. Pay Now Claim Later If your business’s cash flow is robust enough, consider pre-paying certain costs to cover the first quarter of the next tax year, like rent, interest on a business loan, or any expense for which you can claim a tax deduction. Not everything can be prepaid, so consider (a) that a cost can be prepaid, (b) that there will be a tax deduction available for it, and (c) that the full deduction will be available up front. Take an Internal Audit Review your business asset register to determine if any furniture and fittings, plant and equipment items are obsolete, can be scrapped, sold or are accurately valued. Time Your Losses and Gains If your business is due to sell some assets which will realize capital loss, try to crystallize these losses before June 30. Losses can be offset against, and therefore reduce, taxable income. And if there are potentially capital gain producing assets on your register, this could help your decision about which capital losses to realize. Small Business CGT Concessions If you are a small business entity, there could be several CGT concessions available, such as being able to defer capital gain in relation to a replacement asset, a possible 50% discount on active asset gains, exemption for gains made on assets owned for 15 years or more, and a ‘retirement’ exemption. Cut Off Customers Who Owe You Money If it seems that some invoices will never be paid, cut your losses and write them off as bad debts and claim a deduction (they must be written off in the same income year as the deduction is made). Consider Delay of Issuing Invoices If your business revenue is assessable when invoiced rather than as cash arises from the transaction, try delaying invoicing clients until after July 1. Stocktake Time Equals Decision Time If you conduct your stocktake at the end of the financial year, determine what has no chance of moving and get it out the door before July, either by heavy discounting or promotions. Employee Bonuses Many businesses are entitled to claim a tax deduction for an expense in the year in which the business has committed to the liability. If you have committed to pay employees end-of-year bonuses, the accrued expense can be claimed as a tax deduction even though it is physically paid next financial year. All of these tactics can help you have an easier tax year. For more information about Allied Health Professions Australia and Nursing Malpractice Insurance please visit our website http://www.taxforhealthprofessionals.com.au/
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