Ways to reduce tax (legally)

 Tax time is fast approaching so the key to it being less stressful and uncertain is to be prepared. As you read in our last blog, you should never leave it until June (all too late then) 

Here are some things to take into consideration in order to minimise your tax bill

Maximise your deductible super contributions

Maximise your deductible super contributionsThe concessional superannuation cap for 2024 is $27,500 for all individuals. If you go over the limit you will pay more tax! Note that employer super guarantee contributions are included in these caps. For the contribution to be counted towards the employee’s 2024 contribution cap, it must be received by the fund by 30 June 2024.

Purchase Tools of trade

If you or your employees need certain tools of the trade to run your business or do your job, consider purchasing them before 30 June. This could include handheld/portable tools of trade, computer software, computers, digital cameras, protective clothing, and mobile phones.

Repairs and maintenance

To be deductible you will need to make payments for repairs and maintenance (business, rental property, employment) BEFORE 30 June 2024.

Pay employee superannuation now

Make sure you that your employee superannuation payments are received by the super fund or the Small Business Superannuation Clearing House (SBSCH) by 30 June 2024. Payments made on 29 June will unlikely be cleared in time so avoid making last-minute superannuation payments as processing delays may cause them to be received after year-end.

Defer income

Pushing back income will push the tax payable to the following year so if possible, defer issuing further invoices and receiving cash/debtor payments until after 30 June 2024.

Bring forward expenses

If you need to increase expenses, then you purchase consumable items BEFORE 30 June 2024. These include marketing materials, consumables, stationery, printing, office and computer supplies.

Private company (“Div 7A”) loans

If you have borrowed funds from your company in previous years then you need to pay the appropriate principal and interest repayments are made by 30 June 2024. This could be either paid back in full or have a loan agreement entered in before the due date of lodgement for the company return, or risk having it counted as an unfranked dividend in the return of the individual.

Year-end stocktake

If you carry stock, preparing a year-end stock take before 30 June allows you to write off any obsolete or worthless stock items.

Write off bad debts

What debts are you owed? Now is the time to review all outstanding debtors and write off all bad debts BEFORE 30 June 2024.

Small business concessions – Prepayments

Small business concession taxpayers can make prepayments (up to 12 months) on expenses (e.g. loan interest, rent, subscriptions) BEFORE 30 June 2024 and obtain a full tax deduction in the 2024 financial year.

Trustee Resolutions (for companies)

All Trustee Resolutions need to be prepared and signed BEFORE 30 June 2024 for all Discretionary (“Family”) Trusts.

If you are unsure what you need to do in your personal circumstances please contact us at Proactive and we can provide expert advice.