Tax tips, tax, it expenses, startups, small business
With the end of the financial year almost upon us, there are some questions the Nudge team would like you to think about with regard to your small business.

  1. Are you on top of your unpaid invoices? It’s important to review your unpaid invoices (debtors list) as small businesses can claim a deduction for old debts that are unrecoverable.
  1. Are you about to do your year-end invoices? Unless you are a sole trader operating on a cash basis, income is generally assessable when an invoice is issued. This means you might want to hold off invoicing clients until July so that it is taxable in the next financial year.
  1. Do you still have old equipment on the books? It’s important to review your list of assets as small businesses can claim a deduction for the remaining value of any asset that is no longer used.
  1. Have you organised a stocktake? If your business carries stock (for example if you are a retail business), then a stocktake is generally required before the end of the year. During your stocktake, identify unsaleable and damaged stock. If you pass this stock to charities, or gift it to organisations in need, the stock can be written-off and claimed as a tax deduction.
  1. Do you need to update some of your equipment? Small businesses can claim a deduction for the entire purchase price (up to $20,000), rather than having the deduction spread over several years. So purchasing new equipment now means you will receive a tax deduction this financial year.However, please note that the legislation confirming this new threshold of $20,000 has not yet been passed by Parliament. We will provide updates as information becomes available.
  1. Will you be paying your staff a bonus? If you are paying yourself or your staff a bonus you need to think about whether you pay it in this Financial Year (to June 30) or early next year. Paying the bonus this month, will mean you can claim a tax deduction for the payment this financial year.
  1. Are you paying dividends? If your small business is a company, you need to consider if the company will be paying a dividend this financial year or next. Declaring a dividend in July means you have an additional year to pay the tax on it.
  1. Do you owe your company money? Generally, if the director or shareholder owes the company money and there is no agreement in place, the loan must be repaid by the lodgement date of the Income Tax Return for that year. Ignoring these issues could result in an unfranked dividend paid to the shareholder (which means you will effectively be taxed twice, both in the company and in the shareholder’s tax return).
  1. Are you a trust distributing income? If your small business is trading through a trust, the trustee will need to determine which beneficiaries are receiving a distribution, what the proportion of the year-end income is and then prepare a minute resolving this. We will be chatting more about this to our clients with trust structures in the coming week.
  1. Have you considered paying June superannuation early? If you pay your staff super contributions after 30 June (even though payments are not due until 28 July), then you will not be able to claim the tax deduction until next financial year. You can only claim a deduction for superannuation when the payment is received by the superannuation fund, so get in early with these payments to ensure you receive the tax deduction this financial year.