Tax Time Tips

The end of the financial year is almost upon us, and it’s time to turn your thoughts to getting your tax affairs in order and to optimising your tax position. Deloitte partner, Damien Bones shares some tips to help business owners maximise their tax savings and streamline the end-of-year tax compliance process.

  1. Move to a cloud-based fully-integrated financial management solution

Most small to medium enterprise (SME) owners will be familiar with the drawn-out process of waiting until after year-end to generate their financial reports, and the months of work involved in preparing and submitting tax returns – both for the business and personally.

Now there is a way to streamline that process so you can prepare your tax returns right away and understand your tax position just weeks after year-end.

Deloitte Private has been collaborating with SME owners to deliver a solution, known as Deloitte Private Connect. Tailored for your business, the solution integrates with cloud accounting software, such as Xero, MYOB and Intuit, to provide a clear view of the business metrics in real-time, via an online, intuitive dashboard.

The end result is set to simplify and improve the daily management of your business, and make end-of-year tax compliance a breeze.

  1. Make the most of the $20,000 instant asset write-off

The big ticket item in last year’s federal budget for SMEs was undoubtedly a change which allows small businesses (businesses with an aggregate annual turnover of less than $2 million) to get an immediate tax deduction for individual assets that cost less than $20,000 (up from the earlier $1,000 threshold).

The asset can be new or second-hand. The accelerated write-off applies to assets acquired on or after 12 May 2015, and the asset must be first used, or installed ready for use, on or before 30 June 2017. This allows businesses to immediately write-off the full value of the asset and the write-off can be used multiple times, effectively increasing the allowable deductions of a business.

Now may be a good time to acquire new laptops and portable devices under this initiative, especially if you are moving to a cloud-based financial management solution. It’s important to remember that this is a temporary measure, so you may be able to make the most of it this year to minimise your tax. From 1 July 2017, the threshold will return to $1,000.

Tax is time a good time to speak to your adviser about your financial management software and streamlining your back office processes

 

    3. Acquire multiple devices for employees and enjoy FBT relief

As an added sweetener, from 1 April 2016, small businesses will not incur a fringe benefits tax (FBT) liability if they provide their employees with multiple work-related portable electronic devices that have similar functions. These include devices that are primarily used for work, such as laptops, tablets, calculators, GPS navigation receivers and mobile phones. This benefit may be in addition to, or part of, the employee’s salary or wages package. Perfect if you are planning to provide key employees with devices to access your new cloud-based financial management solution!

Previously, an FBT exemption could apply to more than one portable electronic device used primarily for work purposes, but only where the devices perform substantially different functions. Removing the restriction that a tax exemption is only provided for one work-related portable electronic device, of each type, will remove confusion where there is a function overlap between different products (such as between a tablet and a laptop).

  1. Ensure your employees’ super is in order and consider your own super strategy too

SME owners should be aware of their obligations under the federal government’s SuperStream program, which requires employee super contributions to be made electronically in a standard data set. Making the move to a cloud-based fully-integrated financial management solution such as Deloitte Private Connect (see Top Tip 1 above) will enable you to meet these obligations automatically.

SMEs with 20 or fewer employees have until 30 June 2016 to become SuperStream compliant, but SuperStream national program manager Phillip Hind cautions you should not leave it until June to get organised. “Please don’t leave it to the last day to comply because there will be a significant rush, resources will be strained and it might be problematic in that ‘pressure cooker’ environment,” Hind said. “Get it done and out of the way.”

  1. Take advantage of restructuring benefits without tax penalty

On 4 February 2016, the Federal Government introduced into Parliament the Tax Laws Amendment (Small Business Restructure Roll-over) Bill 2016 to enable some Australian SMEs to change their legal structure without attracting a tax liability.

The changes apply to transfers occurring on or after 1 July 2016, and:

  • Provide greater flexibility for small business owners to change the legal structure of their business by allowing them to defer gains or losses that would otherwise be realised when business assets are transferred from one entity to another.
  • Provide small businesses with a new roll-over for gains and losses arising from the transfer of active capital gains tax assets, trading stock, revenue assets and/or depreciating assets between entities as part of a genuine restructure of an ongoing business.
  • Apply to transfers that do not result in a change in the ultimate economic ownership of business assets.
  • Are in addition to roll-overs currently available where an individual, trustee, or partner in a partnership transfers assets to, or creates assets in, a company in the course of incorporating their business.

Get on the front foot with tax planning this year, and consult a professional advisor to maximise your potential tax savings and consider the move to a cloud-based financial management solution to streamline the end-of-year tax compliance process.

Learn more about how Deloitte Private Connect can help transition your business management to the Cloud.  Call 1800 234 119 or Email dprconnect@deloitte.com.au.

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