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End of Financial Year Tax Planning Tips

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Please find below a few tips for small business and their owners on preparing for the end of the financial year.

For Business

  • Depending on your situation, consider deferring income if you are assessed on a cash basis or if you are assessed on an accrual basis, defer the derivation of income.
  • You may be able to realize assessable losses by scrapping obsolete plant and machinery before June 30th.
  • Capital Gains – If you can, defer the realization of a capital gain until after June 30th
  • Revalue trading stock at the lesser of cost, market value or replacement value.
  • Write off bad debts by June 30th. Don’t forget to make the GST adjustment.
  • If you intend to pay director’s fees, remember that the company must make a definite commitment by passing an authorized resolution. For tax purposes you cannot pay them in the following income year.
  • Be careful to check the details of any loans to shareholders. If not set up correctly they may be deemed by the Tax Office as unfranked dividends paid to the shareholder by the company.
  • Review loans by shareholders to a company : - At calls loans may be deemed to be equity and can cause problems upon repayment.
  • If capital gains are already realised, review other activities to identify any capital lossess.
  • Company tax rate for the year ended 30th June 2004 is 30%.

For individuals consider:

  • Reallocating profits or salary into superannuation can reduce your tax liability by up to 33.5c in the dollar.
  • Start a wealth creation portfolio, using a tax effective investment with a Tax Office Product ruling.
  • Government co-contributions – if you earn less than $40,000 per year the government is willing to match your superannuation contributions dollar for dollar up to a maximum of contribution of $1,000 per year.
  • Consider making a contribution to your dependant spouse’s superannuation. If your spouse earns less than $13,800, you can make a contribution to their superannuation and be eligible for an income tax rebate.
  • Review your salary package to ensure you have minimised your overall tax position.
  • Don’t forget to claim your net medical expenses over $1,500.00

The above list is to get you started, please consult us before making any decisions.

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