Whether you file your return as an individual or a SME, I’m going to hazard a guess that you don’t ever really look forward to tax time. It’s like asking people whether they look forward to the federal budget each year – sure, it’s important, but no-one counts down the days in anticipatory glee.
However, so that you can make the most of tax time, I’ve put together a few helpful hints I’ve picked up over time.
Make your return easy with The Greater - When lodging your tax return online, you're able to make the process slightly easier by using pre-fill data to declare your interest income on your return. The Greater is consistently one of the first financial institutions in Australia to offer this to customers. For the full list of institutions that offer this option when lodging your return, and to learn more about pre-fill interest data, click here.
Delay income where possible - If you’re expecting any further income for the remainder of this financial year, see if you can defer the payment date until after July 1st. Simply put off issuing invoices until the new financial year, or review your term investment maturity dates.
Fixer upper - If you’re one of the growing number of Australians with an investment property or portfolio, you should seriously think about doing any repairs or maintenance before June 30.
Think Super - If you’re in a position to make any additional contributions to your super before the financial year ends, you could see a welcome reduction in your tax bill. If you’re self-employed, you may be able to claim your super contributions as a tax deduction. Just remember the yearly limits for contributions.
The right cover - If you take out Life and TPD insurance through Superannuation, the tax benefits could make the cover more affordable than if you purchased it outside of your super. Plus, if you arrange Income Protection Insurance in your own name outside of Super, you can claim the premiums as a tax deduction.
Rental Properties - There is a range of eligible tax deductions that can give property investors considerable tax benefits. The most widely known include expenses incurred in the existing financial year, such as interest paid on money borrowed or the payment of council rates, utility bills and various other costs involved in the maintenance of an investment property. It is not so widely known that it's possible to prepay some expenses for a rental property and claim an immediate deduction.
If you prepay a rental property expense - such as insurance or interest on money borrowed (that covers a period of 12 months or less and the period ends on or before 30 June 2016), you can claim an immediate deduction for this in your 2014/15 tax return. If a prepayment does not meet these criteria and it's $1,000 or more, the deduction claim may have to be spread over two years or more. This is also the case if you manage your rental activity as a small business entity and haven't chosen to deduct certain prepaid business expenses immediately.
The 12 month rule - If you are a small or medium entity, or an individual incurring deductible non-business expenditure, you can claim an immediate deduction for prepaid expenditure under the 12-month rule if the payment is incurred for an eligible service period not exceeding 12 months, and the eligible service period ends in the next income year. For example, if you choose to prepay your Loan interest for the 16 financial year and you do so before 30 June 2015, you are eligible to claim the cost of the payment as a deduction in your 15 tax return.
Bad debts - if you’ve got any outstanding debtors who you’re confident won’t be paying anytime soon, it’s best to write them off before June 30 and claim back the tax deduction.
Think Super (as well!) - Even though Super guarantee payments wont be due until July, if you pay these in June you’ll be able to take advantage of a deduction for this financial year.
Asset write-offs - If your business is eligible, you’re able to write off any asset used as part of a business costing $1,000 or less immediately. Might not be a bad idea to speak to a Financial Planner or accountant if you’re unsure on this one.
Stocktake - seems simple, but this remains the best way to write off any lost or damaged stock and reduce your taxable income.
If you’ve got some more questions before tax time, why not speak to The Greater to see how we can help?
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