As they say, in life, you can be certain of two things, death and taxes. We cannot help with the first, but with some good strategic tax planning we can assist you with managing your taxes to benefit you.

We have compiled this summary of some effective tax planning strategies, that when implemented wisely can provide favourable tax outcomes for you.

As this summary is provided as general information and does not take into consideration your specific circumstances, we strongly recommend you call us to speak to a qualified Compass tax accountant to discuss your specific requirements on 1300 554 948 or get in touch using the form below.

Deductible Superannuation Contributions

You can make a superannuation contribution into your superannuation fund as a deductible concessional contribution to gain a tax deduction in your Tax Return. You must note that there are limits on how much you are entitled to contribute into superannuation each year without triggering higher tax penalties, so we recommend you speak with your superannuation fund to identify any available amounts within your concessional cap that you could consider contributing.

Prepayment of Expenses

If you are an eligible small to medium business and you rent an office, consider prepaying your rent for up to 12 months before 30 June which will provide a deduction in the year you prepaying the expense. This strategy could also apply to other business expenses such as insurance, licences & registrations, subscriptions, as some examples.

Deferring Income

Generally, income is recognised on the date you invoice for the sale / service and not when it is actually paid. Deferring your invoicing until after 30 June pushes the income into the next financing year, decreasing the resulting tax on that income this financial year, but the tax will still need to be paid however in the following financial year. Considerations of the impact on cash flow, sales results, profits, and client relations needs to be considered if looking to defer invoicing.

Asset Purchases

Eligible small to medium businesses considering purchasing a fixed asset (car, machinery, equipment, etc) can take advantage of the temporary full expensing rules to enhance deductions. Under the current rules, individual assets bought from 6 October 2020 and installed ready for use by 30 June 2022, can be written off in full as a deduction in that year (the business use percentage only). If you are considering buying such an asset in the foreseeable future, then bringing this forward to 30 June 2022 or earlier is a worthy consideration. Note that it is generally not recommended to buy an asset just to achieve a deduction. Motor vehicle purchases are also still treated under the Car Limit rules, limiting the overall potential deduction.

Selling of Capital Assets

If you are looking at selling a Capital Asset (ie: shares, an investment property, etc), the date of signing the contract is when the asset is considered sold for Capital Gains Tax (CGT) purposes and not when the asset sale actually settles. This allows an opportunity to consider if signing this financial year or next is going to be more favourable for your CGT outcome. If you are expecting a high CGT outcome, signing after 30 June will move this event into the next financial year pushing any resulting CGT into the next financial year as well.

Write off Bad Debts

You are entitled to a deduction for any bad debts when written off. Keeping your Accounts Receivable up to date is always recommended, but a special review before 30 June is a simple and valuable process, provides a deduction, and keeps your accounts current.

Inventory Stocktake

A process often neglected, resulting in stock figures not correctly addressing the decreased value of obsolete and damaged stock. Conducting a stocktake and appropriately writing down the value of obsolete and damaged stock can provide deductions, as well as providing more accurate stock on hand values for your business planning.

Get in Touch

To discuss your specific requirements please contact Compass on 1300 554 948 or get in touch using the form below – we’ll be delighted to help!

Get in Touch

To discuss your specific requirements please contact Compass on 1300 554 948, get in touch using the form below – we’ll be delighted to help!
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