IT’S TIME TO THINK ABOUT REDUCING YOUR TAX 2020-2021

May 20, 2021 January 14th, 2022
EOFY Tax Checklist

The end of 2021 financial year is coming up quickly, but there’s still time to get your tax in order.

We have put together the best strategies for your end of financial year tax planning, whether you’re a business or an individual.

If you want to take a few simple preventative measures to minimise or defer how much tax you will pay for this Financial Year, you need to do two things:

  1. Read the following checklist, then
  2. Call or email us as soon as possible so we can make a time to sit down with you to assess which of these preventative measures can be done for you in your circumstances.

Depending on your situation, this tax planning process could save you many thousands of dollars. That’s cash in your bank account, rather than the Tax Office’s.

Now … to the checklist. Tick each item you think is relevant to you:

1. Review Debtors:

Your income tax is payable on any invoices that you have issued, even if you haven’t been paid. Don’t pay tax on any invoice you know won’t ever get paid. Review the list of those who owe you money and write off those ‘bad debts’ now.

2. Review Your Stock Levels:

The value of your closing stock directly affects your business profit. The higher your stock value, the higher your profit (and resulting tax). Review and identify any obsolete or old stock and scrap it or re-value it to its correct value. Individual items of stock can be valued at cost, market value, or replacement value. You can use the stock value that gives you the best tax outcome.

3. Review Your Business Assets:

Take the opportunity to write off any obsolete assets and claim the remaining book value.
Have you heard about the instant asset write off? There’s a few conditions to be met in order to apply the new rules and it’s quite complicated. Come and talk to us about the best outcome.

4. Defer Income:

If your cashflow allows, you may consider deferring some of your invoices until July. If the income was not invoiced this financial year, it can’t be taxed this financial year. Before taking this option we recommend having a budget to manage the income and expenses over the coming months. We can help you with that.

5. Review Your Invoices Issued:

If you have invoiced someone in advance for services you will provide in the next financial year, then you may not have earned that income in this tax year. That income may belong in the year you provide the service. Again, this is something we can work out with you when we meet for tax planning.

6. Prepay Expenses:

If you operate a “small business” (turnover less than $10M) you can prepay expenses for up to 12 months, bringing the tax deduction forward into 2021.

7. Pay the June Quarter Superannuation:

Superannuation is deductible only when paid on time. As you must pay the 9.5% superannuation by 28 July, why not bring it forward a month, pay it in June and claim the deduction now.  Just give it a few extra days before 30th June to be received into the superannuation fund.
(Quick reminder that superannuation rates will change to 10% on 1 July 2021)

8. Using all of Your Superannuation Cap:

If maximising your superannuation is part of your retirement plan, then don’t forget to contribute as much as you can into your super fund. We can guide you as to how much you can contribute. It’s a missed opportunity not to do this each year.

9. Employee Bonuses:

Bonuses to employees are deductible when the business has committed to paying them and it is not subject to any discretion. So finalise and sign off on the bonuses to be paid and reduce this year’s tax.

If you need assistance with any of the above items, then we need to talk. And soon.

Get in touch with us via email [email protected] to make a time to meet and discuss your tax planning options.