March 7, 2013 – With the end of the financial year fast approaching, organisations need to start looking at ways to minimise tax liabilities. RSM Bird Cameron, one of the largest mid-tier accounting firms in Australia, offers seven tips business owners should consider.
Andrew Graham, national head of business solutions, RSM Bird Cameron, said, “While business owners should have strategies in place all year round to reduce tax liabilities, 30 June presents some additional opportunities and is a critical deadline for minimising tax for the financial year.”
RSM Bird Cameron’s seven key opportunities for business owners to reduce their tax liabilities are:
1. Superannuation. The minimum super business owners must pay is 9 per cent of each eligible employee’s ‘ordinary time earnings’. Payments must be made at least four times a year by 28 days after the end of each quarter, including the quarter ending 30 June 2013. Business owners can generally claim a tax deduction for super contributions that are paid on time. However, super is one contribution that can’t be claimed until it is paid. This means business owners need to pay the contribution before 30 June to claim it in the 2013 year. Given this year 30 June falls on a Sunday payment would need to be made well before 30 June.
2. Personal super. Like employee super, business owners also need to pay their personal super contributions prior to 30 June to get a deduction.
3. Bad debts. These should be written off prior to 30 June to be eligible for a deduction. Business owners should go through their debtors list and write off anything that is not collectible.
4. Stocktake. A 30 June stocktake is required to determine the correct value of closing inventory and find any obsolete or damaged stock. Business owners can choose to value the stock at cost, replacement or market sale price depending on what is lower. This means that stock that is obsolete or damaged can be written off or reduced in value for tax purposes and claimed as a deduction.
5. Bring forward expenses. Do some forward planning and look at expenditure for the next few months. There may be some expenses that will be incurred but would be better brought forward. Consider items like training, repairs and maintenance or prepaying some interest. The $6,500 instant asset write off commenced in the 2012/13 year, so businesses may consider bringing forward any capital expenditure of less than $6,500 to receive the automatic deduction.
6. Shareholder loans. Make sure that loans are set up properly or repaid by the end of the financial year. Otherwise, business owners could end up with a deemed dividend and some unexpected tax.
7. Trust distributions. If operating a trust, make sure the trustee decides how the profit will be distributed prior to 30 June. This decision should be recorded and signed off before the end of the financial year.
About RSM Bird Cameron
RSM Bird Cameron is the largest mid-tier accounting firm in Australia with national ownership and profit sharing and offers a full range of specialist advisory services, including business consulting and advisory, assurance and advisory, taxation consulting, corporate consulting and turnaround and insolvency. RSM Bird Cameron is a core member firm of RSM International, the seventh largest network of independent accounting and consulting firms in the world.