Another tax year is almost complete. With one month to go until 30 June, now is the time to consider some tax planning strategies. Tax planning is the process of organising your affairs so that your income tax liability is legally minimised. Here is a summary of some last minute strategies you might consider:

Business Strategies 

• An immediate tax deduction is available on all small business asset purchases up to $20,000 each. Your small business can bring the tax saving forward into the current tax year by acquiring these assets before 30 June.

• Legally deferring income results in pushing the tax liability out by another 12 months. You can consider deferring income into the next tax year to take advantage of this benefit. Cash basis businesses can achieve this by delaying the receipt of customer payments until July. Non cash basis businesses can achieve this by delaying the supply of goods and services until July. Deferring income has a cash flow implication – it is important that this is considered when deciding whether or not to defer income.

• Think about what business expenses you can incur before 30 June. This will reduce current year tax. Also ensure that all suppliers invoice you before 30 June for services supplied in June, as this will be deductible to your business even if you only pay your suppliers in July. Small businesses can prepay up to 12 months of business expenses before 30 June and receive a tax deduction for them, even though the expenses will only be incurred after June.

• Your business should consider paying all June quarter employee superannuation contributions by 30 June in order to claim the deduction in the current tax year, as these are only deductible in the year that they are paid.

• June is a good time to review and write off fixed assets no longer used and inventory that is no longer saleable. Also, debtors that are bad and not collectable should be written off. This will ensure a tax deduction for these items this tax year.

Individual Taxpayer Strategies 

• Individuals can contribute up to $25k to superannuation this financial year. You should review how much superannuation you have contributed and consider if you can and should contribute more in June, as it is tax deductible at your tax rate and only taxed at 15% in your superfund or 30% for higher income earners. Seek advice from your financial advisor as to whether this is appropriate for you.

• If you want to donate to charity, June is a good time to consider making tax deductible donations to Australian charities.

• If you own an investment property, you could consider prepaying interest and/or property expenses to make them deductible this year.