Time is running out.
If you want to take a few simple preventative measures to reduce or defer how much tax you will pay for this Financial Year, you need to do two things:
- Read the following 6-point checklist, then
- 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 before the end of the financial year.
Note that the following checklist is just a handful of many possible tax planning measures that could be put in place to reduce your tax bill this year.
Depending on your situation, this tax planning process could save you many thousands of dollars.
After all, why pay one more dollar in tax than you have to?
I’m sure you have better uses for your money, such as investing in your future or just investing in the here and now and rewarding yourself with a little ‘lifestyle indulgence’.
Now … to the checklist. Select each item you think is relevant to you:
❑ Review debtors
Your income tax is payable on any invoices you’ve 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 bad debts now.
❑ 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 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.
❑ Review your business assets
Write off any obsolete asset and claim its remaining book value now. There are various ways assets can be depreciated, that can increase the depreciation expense. This reduces your profit, which in turn reduces how much tax you have to pay.
❑ Defer income — A simple tip that can defer a lot of tax for you
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 these months’ income and expenses. We can help you with that.
❑ 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.
❑ Employee bonuses
Bonuses to employees are deductible when the business has committed to paying them, so sign off on the bonuses to be paid and reduce this year’s tax.
If you ticked any of the above items, then we should talk. Soon.
Once the financial year ends, very little can be done in retrospect and tax planning takes time. We need to start the process with you a month or two before the end of the financial year, to (1) have time to recommend the right tax planning strategies for you, and (2) to give you time to implement the strategies with our support.
Call us on 08 9371 8844 or get in touch with us here to make a time to meet and discuss your tax planning options.