This is a busy time of year for everyone. Making sure this time runs smoothly for you, is our priority at East Coast BBS. Our in-house accountant Hayley Simpson from HMS Accounting and Taxation has prepared some tips to help minimise your tax for 2020.
Up to 12 months of the coming year’s expenses can be deducted in the current tax year, so consider paying up front for expenses such as rent, insurances and subscriptions.
Take advantage of the $150,000 instant asset write-off
This allows you to immediately deduct business assets you have purchased from your assessable tax, both new and used, for assets purchased from 12th March 2020. This threshold has been extended to 31 December 2020.
Write off any unrecoverable debts
These debts will be deducted from your income in the year in which you write them off, regardless of the year you invoiced them.
Top up your voluntary superannuation contributions
Remember, you can contribute up to $25,000 in deductible super contributions each year. Your voluntary or employee super guarantee MUST be received by the fund by 30th June for you to receive the deduction in the 2020 financial year. Pay your super early in June to make sure you get the full deduction. See below for more information for the latest on the ATO super guarantee amnesty.
Invest in income protection
Income protection provides peace of mind that your family is taken care of should anything happen to you, and can also be claimed as a tax deduction, if it is not paid for through your super fund.
Review value of depreciating assets
Review your depreciation schedule for obsolete items and write them off completely.
Complete a stock take
Review your stock valuation and write off any stock that is damaged or obsolete. Remember that stock can be valued at the lower of cost or net realisable value.
Update your vehicle logbook/s
Updating your logbooks ensures you are claiming the most accurate amounts for your motor vehicle expenses.
Keep up the good work on record keeping
The better your record keeping, the more deductions you can substantiate, and the less tax you’ll pay. Keeping good records also ensures you can accurately deal with the ATO should they inquire about your tax returns.
Now is a good time to review how your paperwork and tax records are looking for the financial year ahead. Is it time to get help from a professional Bookkeeper?
Consider private hospital cover
If you don’t have private hospital insurance and your income is more than $90,000 for singles or more than $180,000 for families, you will pay a minimum of 1% Medicare Levy Surcharge. That’s on top of the compulsory 2.0% Medicare levy paid by most taxpayers.
A basic private health cover plan can cost less than the 1% of your gross income – less than the medicare levy that you’ll pay if you have no insurance – and that’s why private cover may be worth a look. (Plus, private health cover has some other advantages like shorter waiting times).
Talk about strategic tax planning with your accountant
Great accountants look at two types of tax planning: short and long-term. Short-term planning looks at what you can do before 30 June to minimise your tax this financial year. Long-term tax planning looks at how you can utilise your business structure to minimise tax, and the type of investments you can make to minimise tax over the long term.
If you are in need of some help with your tax planning, contact Hayley at HMS Accounting and Taxation.