YEAR END TAX ALERT
20 things to consider before 30 June.
1. Prepay private health insurance
Prepay your private health insurance expenses for up to 30 months in advance before 1 July 2012 to continue the full 30% rebate. From 1 July 2012, the rebate is to be means tested for singles earning more than $84,000 and families on $168,000.
2. Prepay the interest of your investment loan
Consider a 12 month prepayment on investment loans, generating a tax refund/ reduction in tax payable of up to $46.50 for every $100 of interest prepaid.
3. Transfer investment assets to investment structures
To avoid the new superannuation contributions surcharge, consider placing investments in other structures to reduce your qualifying personal income below the new $300,000 threshold.
4. Defer term deposit maturity
Defer recognition of income by deferring maturity of term deposits to after 30 June.
5. Log book currency
If you claim motor vehicle expenses using a log book, make sure that you have a current log book.
6. Estate planning
Ensure estate planning is considered for any significant event that has occurred during the year (e.g. marriage, new children/ grandchildren, restructure of business or investment assets).
7. Consider changes to debt arrangements
30 June is a good time to consider your bank debt and options to convert non-deductible (e.g. home mortgage ) debt to deductible debt.
8. Use a credit card to pay tax liabilities
Yes, believe it or not, the ATO takes Master Card/Visa/Amex to pay your tax instalments and get those frequent flyer points. Note some Amex customers obtain only ½ a point, so check first.
9. Review income protection insurance arrangements
Examine current levels of income protection insurance and consider whether increases are appropriate having regard to pay increases/ additional business profits.
10. Consider borrowing to make superannuation contributions
For business, borrowings to fund employee superannuation contributions will be tax deductible.
INVESTMENTS, CGT & BUSINESS
11. Defer capital gains
For assets that are likely to generate a capital gain, consider deferring the disposal until after 30 June. Be mindful that the time of the disposal is the time of the making of the contract, not settlement.
12. Hold assets for >12 months before selling
To obtain the CGT discount, you must hold the asset for more 12 months (measured from date of buy contract to sell contract).
13. Crystallise capital losses
Reassess your capital assets and investment portfolio. If there are assets in an unrealised loss position; consider crystallising losses to offset capital gains or to carry forward to offset future gains.
14. Consider timing of revenue recognition
If your business revenue is assessable when invoiced, consider timing of invoice runs for post 1 July 2012.
15. Write-off bad debts
Review and physically write off bad debt before 30 June 2012, either by writing-off in the books of accounts or passing a resolution of the decision to write off the debt.
16. Scrap obsolete trading stock
Scrap obsolete trading stock prior to 30 June 2012.
17. Conduct year end stocktake
The closing value of trading stock is included in the income of your business. It is therefore important to ensure an accurate count of trading stock is conducted to ensure that stock no longer in inventory is not accidentally included in year-end income.
18. Prepay June quarter SGC minimum contributions
Make sure you pay June 2012 SGC payments before year end. While technically due on 28/7/2012 to meet the employer super guarantee obligations, bringing payment forward locks the deduction into the 2012 year.
19. Repairs and Maintenance
Consider bringing forward repairs & maintenance.
20. Create a 2012/13 revenue and cash flow forecast
Demonstrate that your business is prepared for the new year by creating a revenue and expense forecast for 2012/13 to determine likely trends and outcomes.
Sourse: Hains Muir Hill, Accountants, 888 Doncaster Rd Doncaster East Vic 3109