Time is ticking, are you prepared?
The financial year is drawing to a close again very soon, so we have a simple checklist of 7 actions you need to take before 30 June passes by –
1. Pay your Employee Super pre-30 June.
Super is deductible when paid and paid by the quarterly due dates. The June 2018 superannuation contributions are due by 28th July 2018, however to claim a tax deduction for the June contributions in this financial year you need to make the payment & have it received by the super fund’s by 30 June 2018.
Due to superannuation clearing houses acting as intermediaries, we strongly recommend you make contributions to the super funds as soon as possible. Clearing house dates differ per house, but Xero Super Clearing house recommends making payments no later than 22nd June 2018.
2. Additional Super Contributions for Directors or Principals
Consider making additional super contributions for directors or principals. The concessional contribution cap for the 2017-18 financial year is just $25,000 since 1 July 2017. It is important to check what contributions have been made to the fund before topping up to ensure the concessional contribution cap is not exceeded.
From an income tax perspective, making a deductible superannuation contribution can be hugely beneficial. A business owner earning $150,000 a year could make a deductible contribution of $10,000 for a tax saving of approximately $3,900, making the after-tax cost of the contribution only $6,100. The Super Fund will pay contribution tax at 15% or $1,500, meaning a net overall tax saving of $2,400 or 24%.
Please note – a review of your super balances, age and assessable income components should be done prior to making additional contributions. You should also seek personal financial advice from a qualified financial planner.
“The Concessional Contribution Cap is $25,000 for all taxpayers in the 2017-18 year”
3. Purchase any Plant & Equipment
The $20,000 instant asset write-off for Small Business entities has been extended another year and now ending 30 June 2019. There is not the great rush to purchase assets before 30 June 2018, however if you are looking at replacing or purchasing new business assets in the new few months it could be beneficial from a cashflow perspective to bring this forward.
To claim the accelerated depreciation, you must have purchased the asset and have had it delivered ready to use by 30 June 2018. If paid before 30 June, you may also be eligible to claim the GST input tax credit on your June 2018 BAS.
4. Bring forward Expenses
Looking forward over the next few months – consider what expenses you could bring forward to this month. Work vehicle services due, repairs to office equipment or time to replenish the business cards & stationery?
Make sure you obtain an invoice dated pre-30 June 2018 to be able to claim a tax deduction this financial year. .
“Want to maximise your Motor Vehicle expense claim?”
5. Keep a Log Book
If you haven’t started your logbook, now is the time. The logbook should be commenced before 30 June and kept for 12 weeks. A logbook is only required every 5 years.
Grab a logbook from the newsagents or download one of many logbook apps. As long as you are recording the basics –
– Logbook date commenced & end
– Opening & closing odometer readings
– Total Kms travelled during the period
– The date, # KMs travelled, reason and open & closing odometer for each journey
– The opening & closing odometer reading for the start & end of the financial year (for every year)
6. Sole Traders & Superannuation
Another point on superannuation but this time specifically for sole traders. If you have been making concessional contributions during the year or just before 30 June, make sure you remember to complete the Notice of Intention to Claim a Tax Deduction for superannuation contributions. This form should be completed as soon as possible after 30 June and is generally issued by the super fund. If you need a generic copy it can be accessed directly from the ATO website or from our office. If you are switching super funds, it is critical you complete a form for any deductible contributions before rolling the benefits to a new fund, otherwise you may potentially miss out on the tax deduction.
7. Get Organised
We know bookkeeping and preparing records for end of financial year is not the most exciting thing to do (but we love it). However, it can reap dividends for you at tax time. Keeping receipts, invoices and bank statements is important to ensure you are able to claim GST input tax credits on purchases over $82.50 and a tax deduction for purchases. It also ensures reporting such as Payment Summaries, Taxable Payments Annual Report and Single Touch Payroll can be done accurately.
Most importantly, being organised and having access to profit & loss, balance sheet and cashflow reports means you can take a step back and really get to know your business. Is it healthy? Is there areas you can improve? Have you got surplus cash or do you need to organise a business overdraft?
For all businesses we recommend online accounting software with bank feeds. Our preferred software is Xero and MYOB, but we also work with Rounded, Freshbooks and QBO. If you need assistance setting up an accounting package for your business please contact Jennifer or Karen on 07 3849 3816.