Last Minute Ways to Minimise Your Tax

by Brian Hoult

In the second of our special taxation features, MGI's Brian Hoult looks at small business taxation issues and how to minimise your tax in the last couple of weeks before the end of the financial year.

Follow these pointers:

1. Write-off bad debts

To be a bad debt, you need to have brought the income to account as assessable income, and given up all attempts to recover the debt. It needs to be written off your debtors’ ledger by 30 June.
 
2. Trading stock

Write off any stock that is damaged or obsolete. Complete a stock take (if you are not using the simplified trading stock rules) and remember that stock can be valued at the lower of cost, replacement, or net realisable value. You can use different methods for different stock items.

3. Review your asset register

Check to see if obsolete plant and equipment is sitting on your depreciation schedule. Rather than depreciating a small amount each year, if the plant has become obsolete scrap it and write it off before 30 June.

Small Business Entities can choose to pool their assets and claim one deduction for each pool. This means you only have to do one calculation for the pool rather than one for each asset. It also allows you to claim an immediate deduction for depreciating assets that are bought for less than $1,000.

4. Repairs, consumables (office stationery etc), trade gifts or donations

To claim a deduction for the 2011/2012 year, consider paying for any required repairs, replenishing consumable supplies, trade gifts or donations before 30 June.

5. Employee super

Pay June quarter employee super contributions if you want to claim a tax in the current year. The next quarterly superannuation guarantee payment is due on 28 July 2012.

Some employers choose to make the payment early to bring forward the tax deduction instead of waiting another 12 months.

6. Your super

Don’t forget yourself. Superannuation can be a great way to get tax relief and still build your wealth position. Your personal or company sponsored contributions need to be made before June 30 to ensure deductibility.

7. Capital gains and losses

Neutralise the tax effect of any capital gains you have made during the year by realising any capital losses that you have.

These need to be genuine transactions in order to be effective for tax purposes. It may be possible to contribute assets with unrealised losses to superannuation in order to do this.

8. Management fees

Where management fees are being charged between related entities, make sure that the charges have been raised by 30 June. Where management charges are used, make sure they are commercially reasonable and there is documentation to support this position.

Brian Hoult is a Chartered Accountant for MGI - Business Solutions Worldwide. He'll be bringing you more tax tips in the weeks to come on The Newsport.

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