- Make your superannuation contributions before 30 June
For businesses, your June quarterly superannuation contributions are not due until July. However, by paying the contribution before 30 June you can bring forward the deduction into the current financial year. For individuals, you can contribute concessional contributions up the contribution cap for the 2012/13 financial year is $25,000. For individual employees, this can be done via a salary sacrifice contribution (effectively reducing your taxable income). For those individuals that are self-employed, you can generally make the concessional contribution and claim a deduction via your income tax return provided you have earned less than 10% of your total income via employment.
- Prepay deductible expenses
You can generally pre-pay otherwise deductible expenses such as interest, insurance and income protection up to 12 months in advance. This allows you to bring forward deductions into the 2012/13 financial year that may otherwise have been delayed until next financial year.
- Maximise your rental property deductions
There are many obvious and also not so obvious deductions in relation to investment properties that are available for rent. For properties less than 40 years old, you are entitled to a depreciation deduction for the cost of constructions as well as the fixtures and fittings contained within the property. The calculation of depreciation should be undertaken by a quantity surveyor, who will assess the value of your property and provide a tax depreciation report. This is a tax deductible expense. It may also be a time to consider any necessary repairs that need to be undertaken, as this is generally a tax deductible expense, provided it is done to restore the repaired asset to its original condition and it’s not classed as an improvement.
- Medical Expenses Offset
With the federal government announcement in the recent budget regarding the phase out of the medical expenses offset, this may be one of the last chances to take advantage of this provision. For those who have incurred net medical expenses (that is medical expenses after rebates from Medicare and Private Health Insurers) above the threshold of $2,100, you are entitled to a 20% rebate of the eligible out of pocket medical expenses. For higher income earners, this reduces to a 10% offset and a threshold of $5,000.
- Small Businesses
Review your asset purchases and upcoming purchases; For Small Business Entities (Businesses with aggregated turnover of less than $2m) the threshold for an immediate write-off for asset purchases is now $6,500. So it may be a good chance to review your business asset purchases during the financial year to ensure eligible assets are included for deduction. It may also be a time to review future capital purchases required and whether there is an opportunity to acquire these assets prior to 30 June 2013.
- Business Deductions for Bad Debts and Trading Stock
Before 30 June, take the time to assess you business’ aged debtors and also the value and accuracy of your inventory records. For debtors that are aged significantly, review the likelihood for collectability. If a debt is unlikely to be recovered, the debt may need to be written off, in which case a tax deduction is allowed. You may also be entitled to a refund of GST in certain circumstances. For inventory, tax time may be a good opportunity to assess the value of your inventory, potentially correcting inventory balances via a stocktake. For inventory that is obsolete, damaged or stolen, there may be opportunities for a tax deduction.
- Have you kept a motor vehicle log book?
There are 4 methods available for claiming a work related motor vehicle expense. Many people opt for the cents per kilometre method, as there is reduced record keeping requirements and it does not require a log book for claims up to 5,000kms. However, keeping a log book (even if you travel less than 5,000kms) may still provide you with a greater tax deduction, depending on your business travel percentage. Having a log book also allows you to calculate your best calculation method. A log book is required to be kept for 12 weeks and needs to be indicative of your general travel arrangements. Once kept, the log book is valid up to 5 years.
- Deductions for self-education
Education expenses incurred in relation to your current occupation are generally deductible. This includes courses to further the development and knowledge of your current skills set, but importantly cannot include deductions for education relating to gaining future employment in another occupation.
- Working from home
You may be entitled to deductions for both your ‘running expenses’, including electricity, gas and depreciation, as well as your ‘occupancy expenses’, which may include rent, water rates and insurance. For running expenses, you can either claim the actual amount incurred (if this can be calculated) or a prescribed rate of 34 cents per hour. For occupancy expense, floor area is generally acceptable as a calculation method.
- Tax Free Threshold is now $18,200
This means, now more than ever it is important where possible to use the marginal income tax rates to maximum effect. This includes having income producing investments held in the name of lower income earners. It may also be prudent to increase distributions to beneficiaries at lower marginal income tax rates.
Need some help with your 2013 tax?
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The information contained in this article is general information only. Any points above considered as advice, if any, is general advice only. Your personal objectives and financial needs have not been taken into consideration. You should consider if this information is suitable for your needs and seek the specific advice of your 542 team and/or other relevant advisers before any information is acted on.