If you’ve sold or bought a business in the past year, then you need to be aware of some tax obligations you may have. Selling can trigger some capital gains implications, while entrepreneurs should also be aware of some small business tax concessions – as long as they are under the $2 million turnover threshold.
Tax advisors are always telling entrepreneurs to make sure they maximise the amount they pay into their super accounts – but did you know you can get some benefits for paying your employees early?
While the June quarter super payments are due by the end of July, if you have them paid by the end of June you can actually claim a deduction. This is a simple tip, but one many businesses often forget.
Remember the investment allowance? It seems such a long time ago, but it wasn’t that many years ago the Government introduced the small business and general business tax break to boost investment amid the global financial crisis.
While the economy has seen the worst of the GFC, the tax break remains – but not for long. The 2010-11 year is the last year in which businesses can claim the investment allowance.
The tax break allows SMEs with revenue of under $2 million to receive deductions for equipment worth over $1,000.
But there is a catch, and a significant one: you need to have actually bought the equipment between December 2008 and December 2009, and have that equipment installed by the end of December 2010.
These experts say you need proof that it has been installed, so have documentation.
This can often be an overlooked tax break, but if you’ve had any medical work done, remember to put it in your return. If not, H&R regional director Frank Bass says you could be missing out.
“If you or your family members need to have some medical work or procedure done it is worthwhile trying to consolidate them into one financial year as you are entitled to a rebate of 20 cents in the dollar for every dollar spent over $2,000.”
Plenty of entrepreneurs would be using their own home offices to get work done while they’re at home. But many would forget – or may simply be too overwhelmed – to think about claiming this on their tax.
Experts say this is a mistake. Calculate everything you can: computers, stationery, software, books and any other items that can contribute to your work. If you record each of this you can receive some significant savings on your tax.
But there’s one thing you need to keep in mind: you can’t just deduct all these altogether. You need to determine how often you’ve used each item for both business and personal use, and then submit that to the Tax Office. Don’t just assume you can write off an entire computer because it’s at home; carefully calculate the actual private usage.
This is perhaps one of the most overlooked aspects of the end of financial year season, and one that doesn’t actually deliver any immediate tax benefit. But these experts say you should be getting your computer programs in order for the year ahead.
Payroll software needs to be up-to-date, employee records need to be reviewed and payment summaries need to be out by July 14 at the very latest – they should be sent by email if you want to save on paper as well.
Attache Software managing director Mike Rich says preparation is the key when dealing with end-of-financial-year software obligations, warning that “one of the most troublesome aspects for many companies occurs with the final payroll processing for the financial year”.
This won’t give you an immediate tax benefit, but will save you plenty of trouble in the long run.
If you have any young children then no doubt you’ve spent money on them for school – and you can claim some tax on it.
“If you receive family tax benefits gather up all your kids’ self-education expenses receipts as you can claim the education tax offset in your tax return,” Frank Bass says.
For the 2010-11 year refunds can be as much for $397 for primary school-aged children and up to $794 for secondary school children.
If you have any young children then no doubt you’ve spent money on them for school – and you can claim some tax on it.
“If you receive family tax benefits gather up all your kids’ self-education expenses receipts as you can claim the Education tax offset in your tax return,” Frank Bass says.
For the 2010-11 year refunds can be as much for $397 for primary school-aged children and up to $794 for secondary school children.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
