Save Tax: Release from tax
Will payment of a tax liability create serious hardship? If you are an individual or trustee of a deceased estate you can apply for release from income tax, FBT, Medicare Levy, General Interest Charge and some other interest penalties. Visit www.ato.gov.au and type release from tax in the search box to obtain the necessary application form.
You must have lodged all outstanding tax returns and activity statements with the Tax Office. Serious hardship must be of a significant kind in terms of normal community standards. If the Tax Office refuses your application you can appeal to the Small Taxation Claims Tribunal or the Administrative Appeals Tribunal.
Save Tax: Salary sacrifice
You can salary sacrifice to maximise your total concessional superannuation contributions up to $30,000 (or $35,000 if aged 50 years or over) for the 2015 tax year and enjoy substantial tax savings.
Save Tax: Land Care Operations
You can get a full deduction for capital expenditure on the following land care operations:
- eradicating animal pests;
- eradicating detrimental plant growth;
- preventing or combating land degradation;
- erecting fences to prevent animals entering degraded land;
- erecting fences to separate land classes (if there is an approved land management plan);
- constructing levee or similar;
- constructing drainage works;
- improvements, altercations, etc in relation to levies or drainage works.
Save Tax: Going Concern
The sale of a business or enterprise can be GST free if all the conditions are met. This is referred to as the going concern exemption.
The following conditions must be satisfied:
- the sale must be for consideration;
- the buyer must be registered or required to be registered for GST;
- both parties must have earlier agreed in writing that the sale is of going concern;
- the seller must carry on the business until the date of sale; and
- the seller must supply the buyer all the things necessary for the continued operation of the enterprise.
Save Tax: Repairs and replacements
Repairs are generally tax deductible when they relate to property which is used for income producing activities. The replacement of an item of property will be deductible as a repair if the item is not a separate functioning item, or there is not a complete renewal.
Save Tax: Interest
You can claim deductions for interest paid on monies borrowed to:
- Repay partners’ capital contributions
- Pay undrawn partnership profits
- Repay partners, beneficiaries or shareholders’ loan accounts (but not if they arise from distribution of unrealised capital gains)
- Refinance other borrowings currently used to produce assessable income.
- Acquire income producing assets or property
- Repay business borrowings
- Provide working capital and pay business expenses
- Finance debtors, trading stocks and similar
Save Tax: Family Wages
Does your business employ family members? If so, ensure that their wage entitlements are paid up to date before the end of the financial year. The Tax Office does not look kindly on journal entries for unpaid wage entitlements.
Save Tax: Overtime Meal Allowance
If you receive an overtime meal allowance in connection with an award or industry agreement you can claim up to $28.20 per meal without substantiation. The expense must have been actually incurred to buy food or drink in connection with overtime worked.
Save Tax: Plant Leasing
If you are an eligible small business taxpayer, instead of purchasing plant, you can lease the item and negotiate an advance lease payment for the first 12 months to obtain a substantial tax deduction this year.
Make sure that you do not allow the trade-in value to be deducted from the price of a new vehicle. You should have the dealer pay a cheque for this. You can also negotiate with a finance company for a sale and lease back of plant and equipment.
Save Tax: Discretionary trusts
Does your trust deed allow attribution of income? If so, you might be able to distribute different types of trust income (e.g. primary production income, capital gains, franked dividends, business profits) to different beneficiaries in the most tax efficient method. Does your trust have a corporate beneficiary? You can make distributions to a company to be taxed at the company tax rate of 30% instead of the highest individual rate of 49%. Your accountant will talk to you about the management of Division 7A.
Save Tax: Tax planning
Are you operating a business alone or in partnership with your spouse? Talk to your accountant about establishing a family trust, becoming employees of the trust, having substantial superannuation contributions made by the trust for your both and using a corporate beneficiary to receive any surplus distributions. Your accountant will talk to you about the management of Division 7A.
Save Tax: Small business concessions – eligibility
You are automatically eligible for small business concessions if you are operating as an individual, partnership, company or trust that:
- is carrying on a business;
- has an aggregated turnover of less than $2 million.
Your aggregated turnover is the turnover of your business plus the turnover of any businesses you are connected with or have an influence over.
Save Tax: Buildings and ancillary works
You can claim a deduction for capital expenditure incurred in constructing income producing buildings and structural improvements such as roads, driveways, carparks, bridges, retaining walls, fences, etc. Extensions and alterations also qualify. The claim is a percentage of the cost of construction, including building costs, architect’s and engineer’s fees. The flat rate is 2.5% p.a. although there may be some circumstances where you can claim at 4% p.a. depending on the type of building and date of construction. If you are having construction work done, make sure you get a detailed invoice from your builder itemising the cost. If you have purchased a building and can’t obtain cost details you can get estimates from a quantity surveyor.
Save Tax: Obsolete and unsaleable stock
If you have obsolete stock you may elect to value those items at lower figures if that is warranted because of obsolescence or any other special circumstances relating to each item. The value selected must be reasonable. If your trading stock is unsaleable it is best to dispose of it prior to the end of the financial year. The lower value of stock at year end will reduce your taxable income.
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