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12 Tax Tips to Help You Prepare for Your 2014 Year End Tax
Tax time can be a daunting time of the year, but with the help of these 12 year-end tax tips, you might just be able to see the light shine through and realise that preparation is a key factor that we can help you with.
- Bad Debts
If you have bad debts that are taxable sales and have been overdue for 12 months or more and have no chance of being recovered, it is important to write them off before year end. These bad debts must not be bad, not merely doubtful and must have been previously included as assessable income.
- Trust Distributions
To reduce the risk of paying 46.5 per cent on trust profits, Trustee distribution resolution are needed before 30 June 2014.
- Prepaid Interest
For a capital protected share portfolio, there is potential for big tax refunds for prepaid interest with no cash required by June 30.
- Self Education
If you can show that your are taking a course or completed one that maintained or improved a skill required for your current role or one that is likely to lead to an increased income, you can claim a deduction for self education.
- ATO Benchmarking
The ATO has developed benchmarks to identify taxpayers who report income or expenses different to similar businesses which allows them to identify businesses that are not fulfilling their tax obligations.
- Obsolete Inventory
Obsolete stock may be scrapped or valued below cost subject to specific guidelines and your year end stock take should involve a review of all inventory and identify any damaged or obsolete stock which can be written off. To substantiate all deductions, make sure to keep all receipts.
- Capital Expenditures vs Repairs
To determine if all items are deductible or if they are capital by nature and need to be depreciated review all spending during the year.
- Review Unpaid Expenses
If your business is falling behind in rent or other expenses that work on an accruals basis you may be able to claim the arrears amounts as a tax deduction.
- ATO Compliance
To reduce the risk of any penalties for failure to be compliant make sure you are aware of any ATO changes that have occurred throughout the year.
- Prepay Expenses
Items that can be prepaid include rent, insurance and repairs so prepaying expenses that cover a period of no more than 12 months is a good way to bring forward operating costs before 30 June.
- Depreciation Schedule
For businesses that maintain depreciation schedules, it is important to have them reviewed to ensure there are no items that are no longer on hand and could be written off. The depreciation schedule can add a significant tax deduction and the cost is also tax deductible.
- Small Business CGT concessions
If you are operating a small business you may be eligible for CGT concessions on the sale of business assets.
At McKinley Plowman we provide effective tax planning options that enable you to minimise tax, evaluate your current business position, maximise future profits, and plan for all your legal and financial taxation obligations so if you have any questions about any of these tips or would like to find out more, please contact us.
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