2017 Year End Tax Planning Review

With the end of the financial year fast approaching here are a few key items that are worth reviewing before 30 June 2017:

Bad Debts

If you are on an accrual basis, you will be paying tax on the invoices you issue for the financial year, regardless if paid or not. Review your debtors list prior to 30 June 2017 and write off those invoices you know won’t be paid to avoid paying tax this year on money you will not likely ever receive.

Deferring Income

A further method to reduce income for the year is to consider deferring some of your June 2017 invoices until July 2017. You need to ensure this won’t adversely affect your cashflow however as it may interrupt your customers payment terms.

Bring forward expenses

Bring forward purchases of consumables before 30 June 2017, these including stationary, office supplies, repairs, computer supplies, etc.

Employee Superannuation Contributions

Ensure all employee and employer superannuation contributions for your June quarter 2017 superannuation owing are made prior to 30 June 2017 to secure a tax deduction as superannuation is only deductible when paid.

Prepayment of expenses  (Small Business only)

If your cash flow allows, you should consider making advance payments for expenses over the next 12 months (e.g. Rent, insurance, advertising). If you are eligible for the small business concessions, you can claim an immediate deduction for such prepayments.

Capital Purchases for Assets less than $20,000

If your business is a small business entity (Proposed at turnover of less than $10m) depreciating assets valued at less than $20,000 are immediately deductible provided they are acquired and installed ready for use on before 30 June 2017.

The balance of the general small business pool is also immediately deducted if the balance is less than $20,000 at 30 June 2017.

Repay Director Loans

Repay director loans (i.e. amounts borrowed from the company) to the extent possible prior to 30 June 2017 to minimise any Division 7A loan balances outstanding and thereby minimise any dividends required to be paid as income to shareholders.

Small Business Restructure Rollover

From 1 July 2016, a small business entity can transfer active assets from one entity to one or more other entities without incurring a tax liability. Please contact us if you are considering restructuring your small business entity.

Defer Investment income and Capital Gains

If practical, arrange for the receipt of investment income and the Contract Date for the sale of Capital Gains assets, to occur AFTER 30 June 2017.

The contract date is generally the key date for calculating when a sale occurred, not the Settlement Date.

Investment Property Deductions

If you own a rental property, consider arranging a depreciation report to allow you to maximise the depreciation and building write off deductions for your investment property.

Superannuation…changes from 1 July 2017

Please note the following information is factual only and does not constitute advice or recommendation.

Superannuation advice considering your personal circumstances must be documented in a Statement of Advice.

There have been significant changes to superannuation with legislation passed in November 2016 bringing the most significant changes since 2007.  While these changes largely take effect from 1 July 2017, depending on your personal circumstances, there may be opportunities or strategies to consider prior to 30 June 2017.

For those with super balances approaching $1.6M of more, or in receipt of Transition to Retirement Pensions, the changes are most relevant.  Valuation of Superannuation Assets at 30 June 2017 will be critical in relation to the new $1.6M limits.  Capital Gains Tax (CGT) relief may be available where Capital Gains made on assets held prior to 9 November 2016 would have been exempt from tax under the old rules, however may be taxable under the new rules.  Detailed requirements apply.

The table below outlines some of the key changes.

Should you have any questions regarding the enclosed or the actions that you need to take well before 30th June 2017, please do not hesitate to contact our office.

Phone: 02 4926 5299

Email: [email protected]