Prepare ahead of time to make sure you get the best tax outcome
With the end of financial year approaching it is a good time to prepare ahead of time to make sure you get the best tax outcome.
If you are running a small business you may want to take advantage of the new measures announced by the Treasurer on budget night. The most advantageous of these would be the $20,000 immediate write off of new equipment used in your business. As mentioned elsewhere in this newsletter it is important to be doing this for the right reasons though. For instance, if you were planning on spending on capital equipment in the near future you anyway, you may want to bring that purchase forward to pre 30 June.
If you are planning to make superannuation contributions to claim a tax deduction its best not to leave this to the last minute. For contributions to be effective they need to be received by the fund by 30 June at the latest and sometimes electronic transfers can take longer than expected, particularly if you are using BPay.
Some taxpayers use their motor vehicle for business purposes and there are a number of ways to claim a deduction, the most commonly used being the cents per kilometre method up to a maximum of 5000 kms, and the logbook method for bigger claims. To determine the business use percentage for larger claims it is essential that a log book be maintained for a twelve week period. This percentage can be used for five years. The log book is essential and it should be remembered that travel from home to work is private not business.
People who own investment properties should use the opportunity to take steps to increase their property holding expenses. Any planned maintenance should be brought forward and paid for in June. If you have an interest only loan you can contact your lender and possibly arrange to prepay twelve months’ interest. Not this must be arranged – you can’t just pay it over and consider it interest. Consideration can also be given to getting a depreciation schedule for the property. This enables you to get a deduction for equipment in the home, but also on the building cost of the property.
These represent just a few strategies that can be put in place prior to the end of June. For further information contact our office and speak to one of our team.
