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.

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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.

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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

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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.

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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.

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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.

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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.

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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.

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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.

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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 […]

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Transfer Pricing rules getting serious attention

Do you have dealings with a related overseas entity?  If so, you may have been caught up with the dreaded complexity of the Transfer Pricing (TP) rules.  This is receiving increased attention by the Tax Office and by a Senate Committee currently examining the question of whether overseas companies are paying their fair share of tax on income earned in Australia. These rules are not limited to the ‘Apples’ and ‘Googles’ of this world but, due to increasing trade globalisation, they increasingly apply to small and medium enterprises.  The OECD term for entities which may be caught up in this […]

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Taxation discussions commences

The Federal Treasurer, Mr Joe Hockey, has issued a Tax Discussion Paper which is titled Re: Think.  Mr Hockey said that the Paper begins a dialogue on how to create tax system that supports high economic growth and living standards, improves international competitiveness and adjusts for a changing economy and new opportunities.  He noted that the current tax system, having been designed before the 1950s, is not suited to the 2050s. The Discussion Paper is a 203 page document and is available on The Government is encouraging consultation and is planning to issue a Green Paper to be published […]

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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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Save Tax: Non income earning property

If you have a property which does not earn income (eg vacant land or unoccupied building), you cannot claim the expenses as tax deductions unless you are genuinely trying to rent it out. If the property can be made to be income producing – by renting it or agisting stock on it, or renting it out as a parking lot – then it may be possible to claim your interest, rates, land tax, etc. If you intend building a rental property on the land in the reasonably near future you can claim the interest.

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