Year End Strategies

Year end strategies
There are some moments in life when it pays to leave things to the last minute but dealing with financial planning or tax is not one of those. It is always in your best interest to manage this in advance and discuss with your advisors and business partners to make sure that everything is in order. You may consider the following strategies as part of your year end tax checklist:
 Deferring Income: Income can be deferred to next year if entitlement to income can be delayed. Deferral of income may reduce tax obligations.
 Accelerating deductions: Common deductions to bring forward are bonuses, interest, directors’ fees, stationery, trading stock (must be on hand), rent, training & development, airfares and accommodation, FBT June quarter instalment, superannuation (must be paid before 30 June).

 Bad Debts: If there are bad debts, they can be physically written-off the books by the 30 June. Make sure that the debt qualifies as a bad debt.
 Salary sacrifice contributions: If marginal tax rate exceeds 15%, consider contributing to superannuation fund through a salary sacrifice arrangement.
 Super con-contribution by Government: You can be entitled to a super con-contribution of $1 for every $1 of eligible personal super contribution from after tax income (up to a maximum of $1,000).
 Negative Gearing: Investments that have generated a short term loss are tax deductible. As long as the investment grows at more than the rate of inflation, negative gearing can generate long term benefits for investors.
 Review private use of company assets and loans: Remember that assets owned by a company, available for use and under the control of an individual, may create benefits which will be deemed a payment to an individual just as with a private loan.
 Dispose of non-performing investments: Recall the losses that can be offset against other capital gains. Review assets and dispose of any non-performing investments to take advantage of the capital loss.
 Obsolete stock: All stock should be reviewed during the end of year stock-take and choices made in relation to its value as a tax and commercial asset. Consider the age of the items, likelihood of future sales and their scrap value. Remember to keep and file all relevant documents.
 Education tax refund: Remember to keep all receipts and documents related to educational expenses for children such as school text books, stationery, laptops, home computers and related equipment, computer software for educational use and home internet connections etc.
 ATO cracking down on trusts: This year it is particularly important that tax planning for trusts is conducted prior to 30 June 2012. The law requires the trustee of the trust to draft profit distribution minutes on or before the end of the relevant financial year and the ATO is now taking serious steps to enforce this. Random reviews in the month of July will be conducted by the ATO to ensure the trust distribution minutes are in place before 30 June of relevant financial year. If you have a trust from which profits need to be distributed, please endeavour to have your accounts as close to up to date as possible so that you can review profits and prepare distribution minutes before 30 June.

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