This article was written by Reckon Team

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Deductions, write downs and general savviness – there are a few solid ways to increase your tax benefits this End of Financial Year (EOFY) and squeeze as much juice as you can out of your benefits.

 

1) The new $30,000 instant asset write off scheme

Remember this budget win? It has been upped from previous years when it was $20,000, and it has been extended again for the benefit of the small business community.

Read up on what the extension and expansion of this means here in our recent blog. Check it out for full details on how your business can use it, or tactically decide not to use it, depending on your business circumstances.

If you are in the camp that would benefit from new machinery or business related equipment, make sure to get your tax benefit with this scheme and talk to your advisor if you are unsure how or if to use it as it could be a massive tax win for you.

 

2) Is that thing obsolete?

Check out the state of your equipment, your stock and associated business assets.

Do you have any old or unusable stock or equipment you either can’t sell or has become obsolete? It would be smart to look into writing these off.

You will need to provide evidence that you tried to sell it or notes describing its obsolescence to the business. Writing such stock off will recoup some of this loss. Be sure to enter these write offs into your accounting software before June 30.

 

 

3) Super saver

Can you spare a penny for your retirement nest egg? Not only will you have a greater pool to play with later in life, you will also receive immediate benefit during EOFY.

One of the best legitimate ways of reducing your tax is to volunteer super payments.

Small business owners have the choice of getting their business to contribute anywhere up to $25,000 into super (including any super guarantees), taxed at 15% within the fund, then claim a deduction for the super contribution.

Again, if you do this, be sure the funds are held in the nominated super account before June 30.

 

4) Bad debts to the rescue

Are you owed money? That’s a pain but it could also be used as a tax benefit.

These unpaid debts that are owed to your business are known as bad debts. Make sure you take the time at year’s end to tally up your bad debts through the year. Your accounting software can do this with ease, if not, ensure you have records and evidence to support your claims.

Be sure these debts were originally entered as ‘income’ to be eligible. You should also include board meeting minutes etc. that specify the nature of the bad debt and detail the agreement to deem it reasonably so.

Be sure to write these off before June 30 to claim a decent deduction.

 

5) Your advisor is indispensible

When it comes down to it, relying on your own information and online guides like this and others, will only go so far. This is your business and this is important, so while you are upskilling and getting a better handle on EOFY, give your advisor a buzz.

After all, they are experts in their field and with such a transient landscape and the effect of elections, tax law is forever evolving. Your absolute best bet for reducing tax, exploiting all benefits available and ensuring you are compliant with Australian tax law is looking to the double edged sword of smart accounting software and an attentive bookkeeper.

Don’t avoid them and don’t wait too long, a simple meeting and a look through your accounting software records should be sufficient for you to gain a commanding knowledge of how you can pay the least amount of tax legally possible.

 

The contents of this blog is of a general nature and for guidance only. Reckon do not provide professional advice. Viewers should consult with a professional adviser for advice on their specific circumstances.