Tax planning is a year-round activity at Stanley & Williamson, but June is the time to double check that any critical actions are taken before 30 June.
We’ve spoken to lots of clients throughout the year and especially over the last few weeks about actions to take for their individual circumstances, but as we approach the end of the year we thought it worth reminding you of things that need to be attended to before the new year rolls around:
- Review your capital gains tax position for the year and take appropriate action. If you’ve made gains, do you have any unrealised losses you could crystallise before year-end to reduce the tax impact?
- For a small business turning over less than $2m per year, consider prepaying expenses up to 12 months in advance to get a deduction this year. A company prepaying $10,000 of rent, for example, would reduce its 2015 tax bill by $3,000.
- Small businesses planning to buy business assets (eg cars, machinery, office equipment) for up to $20,000, consider making your purchase before 30 June to take advantage of the newly increased instant write off threshold discussed in our budget special.
- For individuals, are there deductible expenses you know you have to pay soon that you could pay before 30 June to get a tax deduction this year? Examples might be income protection insurance, or perhaps rates, strata levies and insurance for investment property owners.
- If you have an investment loan, talk to the lender about whether you can pre-pay up to 12 months of interest on the loan. If you earn between $80,000 and $180,000, a prepayment of $10,000 would reduce your 2015 tax by $3,900.
- Businesses, depending on cashflow, may want to consider deferring invoices until after 30 June to put off the tax on this income until 2015/16. Also reviewing any bad debts or obsolete stock and writing them off if justified would make sense as well.
- Make sure you read the Super Reminders article in this edition!
Remember that the company tax rate for small businesses drops by 1.5% from 1 July, so strategies that defer profits to next year will result in real tax savings.
As always, if you’re in doubt you should call us to discuss your individual situation.