| Year End Tax Planning ? (Short List) |
| With the end of another financial year just around the corner it is time to consider year-end tax planning opportunities. Year-end tax planning does not necessarily mean that you need to enter into complex, sophisticated arrangements. |
Consider the following:
1. Timing and derivation of income. Possibilities include:
Delaying billing of work in progress;
Deferring sales until the next financial year;
Making use of any CGT roll-over relief on disposal of assets;
Timing of lodgment of insurance claims and final payment arrangements; and
Timing of dividend payments by companies.
2. Timing of expenses.
Bad debts need to be written off by 30 June, in order to be deductible;
Prepayment of expenses, including rent, interest, repairs, insurance, stationary, bonuses.
Note that the prepayment rules should be carefully considered, as prepayments are generally fully deductible, only for non-business individuals and small businesses (i.e. turnover under $1 million and depreciable assets under $3 million).
Superannuation contributions need to be paid by 30 June (even though they are not yet due under the Superannuation Guarantee requirements) to be deductible this year.
3. Stock on Hand.
Assess the most appropriate valuation for closing stock for tax purposes (i.e. cost, market selling value or replacement value);
Consider scrapping of obsolete stock prior to 30 June to obtain a deduction;
It is recommended that a physical stocktake is undertaken.
4. Capital Gains.
You may be able to realise capital losses prior to 30 June, which can then be offset against any capital gains incurred during the income year;
Note that capital losses cannot be offset against ordinary income (only capital gains).
1st-June-2004 |
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