Below is a list of helpful pointers that may assist you in managing your 2016 income tax obligations:
- Consider if income can be deferred to a later year.
- Consider whether deductions can be brought forward to the current year.
- Consider prepaying expenses to bring forward deductions (if eligible). Individuals prepaying non-business amounts and small businesses are not subject to the prepayment rules if the period is 12 months or less.
- Review your Debtors ledger and write off any bad debts prior to 30 June 2016. You will need to prepare a minute approving the write off and amend the relevant BAS for the GST.
- Consider whether any offsets are available.
- Ensure statutory obligations in relation to employees (superannuation guarantee contributions, payroll tax, etc.) have been met.
- Superannuation is deductible when actually received by the superfund (not paid to the clearing house or payroll intermediary if you use one), so arrange to pay any employer or personal super contributions prior to 30 June to obtain the relevant income tax deduction in the 2016 year.
- Consider maximising your superannuation to the contribution cap of $30,000 (or $35,000 for those 49 and over at 30 June 2015).
- Review super contributions made by you, or by your employer on your behalf, to ensure that you do not exceed your relevant contributions caps.
- If you are over 60, you should consider commencing a Transition to Retirement pension. Once aged 60, pension income received is exempt from tax. Depending on your age, working status, and previous non-concessional contributions, this may then be re-contributed back into your superannuation fund.
- Small businesses (group turnover less than $2M) are able to claim an immediate deduction for capital acquisitions of up to $20,000. Consider acquiring assets prior to 30 June 2016 so that the deduction may be available, rather than leave until the 2017 financial year.
- Primary producers can claim an immediate deduction for the cost of fencing and water facilities and depreciate over 3 years the cost of fodder storage assets.
- Review your listing of fixed assets and scrap any of those that are no longer being used.
- If selling any capital assets, note that it is the contract date, rather than settlement date, that triggers a capital gains tax event. Consider entering into a contract for sale after 30 June if a capital gain is expected to arise.
- If you have capital gains arising in the 2016 year, consider whether any assets which may result in a capital loss should also be disposed of prior to 30 June to offset any current year capital gains.
- If assets have been sold during the year, consider eligibility requirements for the general 50% CGT discount and the small business CGT concessions?
Should you wish to discuss any of the above items or require any assistance with your year-end tax planning, please contact your tax advisor.
BLOG CREDIT- Katrina Brennan