Spend forward for deductions
WITH June 30 fast approaching, now is the time to be planning your strategies to ensure legitimate savings can be achieved.
Most tax planning strategies involve spending money to obtain a tax deduction, so it is important that you carefully plan your cash flow requirements to ensure your business is not adversely impacted by bringing some spending forward.
One of the more common strategies to minimise taxable income for a financial year is to make contributions to superannuation.
Contributions in respect of the quarter ending June 30, 2011 must be made before June 30 for a deduction to be available in the 2011 year. For family businesses, you should consider maximising concessional contributions for key family member employees.
Concessional contributions are limited to $25,000 for employees aged less than 50, and $50,000 for those over 50 years. Contributions above these caps are subject to tax at the top marginal tax rate.
In addition a business can claim expenses that are incurred before year end to reduce taxable income.
A prudent measure would be to consider up-and-coming liabilities the business is facing and ensure they are incurred before June 30. Bad debts should be documented and physically written off in your accounting system to enable you to get a deduction.
You should contact your tax agent to discuss your specific circumstances.