CONSIDER THE FOLLOWING OPPORTUNITIES
1. Delay Deriving Assessable Income
One effective strategy is to delay deriving your income until after June 30, 2018 by:
a. Delaying the Timing of the Derivation of Income until post June 30.
b. Timing of Raising Invoices for Incomplete Work (Businesses)
Where this strategy will not adversely affect your cash flow, consideration should be given to deferring the recognition of income until after 30 June 2018. Please note, not banking amounts received before June 30 until after June 30 does not qualify because the income is deemed to have been earned when the money is received or the goods or services are provided (depending on whether you are on a cash or accruals basis of accounting).
2. Bringing Forward Deductible Expenses or Losses
Prepayment of Expenses - In some circumstances, Small Business Entities (SBE) and individuals who derive passive type income (such as rental income and dividends) should consider pre-paying expenses prior to 30 June 2018. A tax deduction can be brought forward into this financial year for expenses like:
A deduction for prepaid expenses will generally be allowed where the payment is made before 30 June 2018 for services to be rendered within a 12-month period. While this strategy can be effective for businesses operating on a cash basis (not accruals) basis, we never recommend you spend money on items you don’t need. However, paying expenses in June that are due in July could save you some tax this year and provided your cash flow permits, it makes good business sense.
Superannuation Contributions - some low or middle-income earners who make personal (after-tax) contributions to a superannuation fund may be entitled to the government co-contribution. The amount of government co-contribution will depend on your income and how much you contribute. (Refer to the Superannuation Section for more information)
Capital Gains/Losses – the timing of the sale of assets is critical and deferring the sale until after June 30 will defer the tax exposure on the profit. Of course, if you have made other capital gains during the financial year it could be worth bringing forward the sale and crystallizing the loss so you can offset it against the other capital gains. Note that the contract date is often the key date for when a sale has occurred for capital gains tax purposes, not the settlement date.
Accounts Payable - If you operate on an accruals basis and services have been provided to your business, ensure that you
have an invoice dated June 30, 2018 or before so you can take up the expense in you accounts for the year ended 30th June 2018.
Disclaimer: This newsletter contains general information only. Regrettably, no responsibility can be accepted for errors, omissions or possible misleading statements or for any action taken as a result of any material in this guide. It is not designed to be a substitute for professional advice, as such a brief guide cannot hope to cover all circumstances and conditions applying to the law as it relates to these items.