2015 Year-End Tax Planning Tips

The article aims to provide you with a few tips to assist you in minimising your tax bill this year.

Small Business

The big winners are small businesses. Essentially, a small business is a business that has a turnover of less than $2M annually.

A good strategy may be to defer any income to 1 July 2015 and accelerate income tax deductions to the current financial year due to the following changes introduced in the budget:

- $20,000 Asset Write-Off

If you considering new purchases such as plant and equipment, computers, office furniture, motor vehicles etc. then now might be the time to do so. The government announced an immediate tax write-off for capital expenditure up to the value of $20,000 (effective from 12/5/15). The $20,000 applies to each individual asset purchased.

- Reduction in Company Tax Rate

The company tax rate for small business will reduce by 1.5% to 28.5% from 1 July 2015.

- Tax Offset for Unincorporated Small Businesses

Small businesses that are unincorporated (including sole traders and partners in partnerships) will be eligible to reduce their tax liability on their business profits by 5%. The maximum rebate will be $1,000.

Deductions

- Motor Vehicle

From 1 July 2015, there will be only 2 methods to claim work related car deductions:

Log book or cents per kilometre method.

In order to maximise your motor vehicle deduction, we recommend keeping a log book to calculate your business percentage.

- Bad Debts

Consider writing off bad debts prior to 30 June, where your efforts to recover those debts have failed.

- Prepayments

For small businesses or non-business individuals, if you prepay expenses and satisfy the 12-month rule, you can deduct those expenses immediately e.g. rent, interest, subscriptions etc.

For large businesses, prepayments over $1,000 need to be apportioned over the period of service.

Superannuation

It may be worth topping up your superannuation but you need to be conscious of the caps.

- Concessional Contribution Caps

These are contributions that are tax deductible.

For those under 50, the cap is $30,000 per annum.

For those turning 50 during the financial year, the cap is $35,000 per annum.

In order to receive the tax deduction this year, the contribution needs to be made to your superannuation fund and received by your fund before 30 June.

- Non-Concessional Contribution Caps

These are contributions that are not tax deductible.

The cap is $180,000 per annum.

Under 65 year olds can bring forward 3 years, making the cap $540,000.

Over 65 year olds have to satisfy a work test.

We hope you enjoyed this article and please contact us if you have any questions.

Disclaimer - The material contained in this newsletter does not constitute advice. DPL is not responsible for any action taken in reliance on any information contained in this newsletter. Anyone reading the newsletter should not act upon material contained in this newsletter without appropriate consultation.