End Of Year Tax Checklist

Here is a helpful checklist that will help you to review your business’ finances over the past year and assist you in thinking about strategies that will help you move forward in the upcoming year.

  • Superannuation
    If not yet retired, earnings on superannuation investments are taxed at 15%. It is worth considering saving for retirement using super funds in order to benefit from this low tax rate.
  • Salary Sacrifice Contribution
    If a marginal tax rate exceeds fifteen percent, consider contributing to the related superannuation fund through a salary sacrifice arrangement.
  • Negative Gearing
    Investments that have generated a short term loss are tax deductible. As long as the investment grows at more than the rate of inflation, negative gearing can generate long term benefits for investors.
  • Education Tax Refund
    Remember to keep all receipts and documents related to educational expenses, such as text books and conferences. These are tax deductible.
  • Prepay Expenses
    If a business has a turn over of less than $2 million, then it may be entitled to an immediate tax deduction for pre-payment of expenses. This only applies if the period was covered in 12 months or less.
  • Bad Debts
    If there are bad debts, they can be physically written-off the books by 30th June.
    Make sure that the debt qualifies as a bad debt. The amount must be previously owed to an account as assessable income and all attempts to recover it given up.
  • Deferral of Income
    Income can be deferred to 2011/12 if entitlement to income can be delayed.
    Deferral of earnings may reduce tax obligations.
  • Staff Bonuses and Employee Holiday Pay
    Ensure that accrued holiday pay and bonuses are paid within 63 days of the balance date
    so that they are deductible.
  • Review Private Use of Company Assets and Loans
    Remember that assets owned by a company, available for use and under the control of an individual, may create benefits which will be deemed a payment to an individual just as with a private loan.
  • Employee Super
    Make sure that superannuation entitlements are paid to employees by 30 June 2011.
    That way they will be tax deductible.
  • Dispose of Non-Performing Investments
    Recall that losses can be offset against other capital gains. Review assets and dispose of any
    non-performing investments to take advantage of the capital loss.
  • Obsolete Stock
    All stock should be reviewed during the end of year stock-take and choices made in relation to its value as a tax and commercial asset. Consider the age of the items, likelihood of future sales and their scrap value. Remember to keep and file all relevant documents.

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