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Eight top tips for your tax

2017 Tax Planning – Client Alert

30 June 2017 is fast approaching. Sammut Bulow are providing you the below tips to assist you in minimising your tax payable in the 2017 financial year.

Sammut Bulow can also prepare a tax estimate and more customized recommendations to assist you in minimising your tax payable. We recommend contacting your Sammut Bulow accountant to discuss your tax planning options.

Tax Planning Tips

1. Purchase Assets (Small Business)

Small businesses can immediately deduct assets costing less than $20,000. If you are considering buying an asset in the next couple of months, we recommend you consider making the purchase and installing the asset for use prior to 30 June 2017.

This immediate deduction is only available up to 30 June 2017. If you are looking at buying any assets under this value then now may be the time to buy to maximise your tax savings. NOTE – It is always important that you only purchase assets required in the business. Business and personal cash flow and financing should also be considered.

2. Owner Superannuation Contributions

Maximising your superannuation contributions prior to 30 June 2017 can help reduce your tax payable. Your superannuation fund needs to receive the contribution by 30 June 2017 for you to receive the deduction this year.

The maximum contributions you can make during the 2017 year are as follows:

  • Under 50 years old in 2016-17 – $30,000

  • If turning 50 years old or older – $35,000

To ensure you don't exceed the contribution caps, we recommend you confirm your current year-to-date contributions with your superannuation fund prior to making the contribution.Keep in mind that concessional contribution caps for all individuals will be $25,000 for all taxpayers post 1 July 2017

3. Prepay Expenses (Small Business Only)

Small businesses can claim a deduction for future expenses prepaid before 30 June 2017. You can maximize your 2017 tax deduction by bringing forward payment of expenses to June 2017.  

4. Review Bad Debts

We recommend you review your trade debtors at 30 June 2017 and assess whether any of the debtors are no longer collectible. If they are no longer collectible, the trade debtor can be written off as a tax deduction and claimed in the 2017 year.

To be considered a bad debt, you must have made a reasonable attempt to collect the trade debtor. This can include sending reminder notices or calling the trade debtor to request payment. For large debts, the services of a debt collector may need to be engaged prior to writing of the debt as bad.

5. Employee Super Contributions 

Employee superannuation is only deductible when the contribution is actually made. We recommend paying your employee superannuation for the June 2017 quarter before 30 June 2017. This will allow you to deduct the superannuation contribution in the 2017 year.

6. Defer Income

Where possible, defer issuing invoices until after 1 July 2017. This will allow you to defer recognizing the income in your tax return until the 2018 financial year.

7. Review Related Party Loans

If you operate your business through a company and you have a current Division 7A loan with the company, we recommend ensuring you have met your obligations prior to 30 June 2017. This includes making the minimum repayment where appropriate.

Failure to adequately address your Division 7A obligations could result in a deemed dividend being paid to the shareholder. This will be taxed at your marginal rate without any franking credits.

If you have a Division 7A loan, we recommend contacting your accountant to discuss what actions are required prior to 30 June 2017.

8. Capital Gain

If you have sold any capital asset during the 2017 year you may have made a capital gain. This can result in additional tax payable when we lodge your income tax return.

If you have sold a capital asset, we recommend contacting your Sammut Bulow accountant to discuss your tax options.

Alternatively, if you are planning on selling an asset, we recommend you consider delaying signing the contract until after 1 July 2017 to defer the capital gain until the 2018 financial year.

Want to have your own custom tax planning report for you or your business? Contact Sammut Bulow