Tax Tips

2019 Top 20 Business Tax Tips

Our top 20 list of potential measures to consider before & after 30 June to improve your 2019 tax outcome.

Pre 30 June

1. asset write-off now $30,000

The 100% depreciation write-off limit is now 20,000 to 31/12/18, then 25000 to 3/4/19, & 30000 from 3/4/19. This is the cost excluding GST, which will also be refundable in your June BAS.

2. tools & replacements

Note that Low-value items with an expected life of less than 3 years can generally be expensed 100% rather than depreciated. These might include hand tools, minor office equipment, furnishings, utensils, linen etc.

3. prepayments

Prepay costs up to 12 months, eg advertising, rent, seminars, insurances etc. Customers that prepay you are also not income until the supply has been performed or completed, and in the meantime may be a deposit liability.

4. defer income & incur costs

Debtors & creditors are included in taxable income unless on a cash basis (eg a one-person trade or consultancy). Hence defer invoices, or bring forward expenses. Trading stock purchases may have nil effect.

5. pay employee super

SGC super is only deductible if paid by 30 June, and is due by the 28th July in any case. But important it's received by the super fund well before 30 June (a Sunday this year), so pay early. If using ATO's SBSCH do it asap.

6. pay staff super now

Super is not deductible unless paid by 30 June, and it will be due for payment by the 28th July at any rate.  So it's worthwhile paying this out up to date before year-end.  Also important it's received by the super fund well before 30 June (a Saturday this year).

7. capital gains

Offset any current year capital gains by realising any loss assets or investments. Small business CGT concessions may apply to active assets. The CGT threshold remains either $2m turnover or $6m net assets.

8. shareholder loans

Repay funds to a company prior to 30 June to reduce Division 7A loans and interest, and avoid dividend deeming provisions..

9. pay company tax

Pay company tax as an alternative to high personal tax rates, and utilise the tax credits in a future low income year. Trusts may distribute to a 'bucket company'. Company tax is 27.5%, or 30% if over 80% passive income.

10. split income

Trust distributions to family members are fine, unless a minor, but need a 30 June Trust Resolution. Company wages should have a justifiable basis, and a PSI company is prohibited. Payment summaries & SGC super needed.

Post 30 June

11. depreciate assets

The small business rate is 15% for new purchases and 30% thereafter on the reducing balance. If the total written down balance at year-end is less than 30,000, before depreciation, then a 100% write-off may apply.

12. accrue expenses

Costs that you are legally obliged to pay after year-end, eg Payroll Tax or Workers Compensation, may be accrued as a deduction. This must be reliably calculated, and excludes other unpaid payroll amounts.

13. stock write-off

Document a stocktake at 30 June and value all items at the lower of cost or realisable value, disposing of obsolete items. Small business concessions allow an estimate if trading stock changed by less than $5000 in the year.

14. bad debt write-off

Non-recoverable trade debtors can be expensed as a bad debt expense, but only if it has been previously bought to account in income.

15. travel & allowances

Maintain a travel schedule to evidence these costs and also enable a non-taxable travel allowance to you based on approved ATO rates.

16. home office

If no other business premises, reimburse holding costs on a % of floorspace used, and a reasonable % usage of utility costs. A record of calculations is needed.

17. car fringe benefits

Unless a commercial vehicle, maintain a log book for min 3 months. A car reimbursement to entity income for private use will then avoid an FBT return and tax, and allow 100% vehicle deductions.

18. issue dividends

Consider whether franked dividends are an option if you paid company tax in a prior year. Ensure company tax is paid-up for 2019 dividends. Franking credits remain refundable, depending on your other income for the year.

19. small business tax offset

If you are a trust, partnership or sole trader, this 8% tax offset applies to business income in your personal return, up to $1000.

20. review personal tax

Estimate tax effect of all wages, dividends, distributions and any tax credits or offsets. The LITO offset $445 phases out from 37000 and the new LMITO $1080 from 90000. See our personal tax tips & calculator.

2019 tax estimates

Estimate company tax here, & personal tax from dividends, trust/partnership distributions or sole trader profits;
   
Please note that the above is a summary only, may not suit your circumstances, and some new laws are yet to be passed.
Kind Regards
BCA Team

Last updated: 23/06/2019