Seven Tax Minimisation Options before 30th June 2021

Now is the time for us to review and minimise our estimated tax position. Once we have past 30th June, there isn’t really anything that we can do about it.

In this article, we want to briefly discuss few possible options for small businesses (aggregated turnover less than $10 million) that you may want to consider.

Please note this article does not discuss any eligibility in detail and that we recommend you obtain professional advice to confirm eligibility and suitability specific to your circumstances.

1. Small Business Pool Write-off

Before you start spending any money, we recommend that you check with the accountant if you are eligible for this, as this alone may significantly reduces your taxable profit for the year ending 30th June 2021.

If your turnover is less than $10 million, and you have a balance in your existing small business pool, you can claim the balance of that small business pool as a deduction. For example, if your small business pool balance is $100,000, you can deduct the entire $100,000 in 2021 financial year.

2. Inventory /WIP Write-off
In the previous article, we discussed about reviewing your inventory / WIP level. If you noted any old, obsolete stock or WIP, write it off before 30th June.

3. Bad Debt Write-off
Review your debtor list and identify any old debtors. Make a plan (e.g., contacting them, or going through debtor collector, etc.) to attempt collecting the debts before 30th June, and review the likelihood of receiving these debts in the near future. If the debts have been there for quite some time and you think it is unlikely to be paid, write it off from your accounting system before 30th June.

4. Pay Employee Super
You are more than likely aware that June 2021 quarter employee super are due to be paid by the 28th of July. But do you know that if that June quarter super is paid after 30th June, it will only be deductible in the next financial year?

If you want to claim it in 2020/21 financial year, we recommend that you make the payment well before 30th June to ensure that it is received by the employee super funds before 30th June.

5. Bring Forward Expenses

If you are looking into spending some money to get more tax deduction before 30th June, you can also bring forward some of next year’s expenses to before 30th June 2021.

6. Prepayment
Small business can also prepay up to 12 months of prepayment on expenses such as insurance, rent, subscriptions, and claim it as deduction in 2020/21 financial year if it is paid before 30th June 2021.

7. Instant Asset Write-off
If you have been thinking of purchasing one or more depreciating assets that you need for your small business, and you also need some deduction for 2020/21 financial year, you may want to look into this (your eligibility) further, as if you acquire the asset and have it ready for use before 30th June 2021, you can claim the cost of that depreciating asset in 2020/21 financial year.

Taxation is complex and you need to assess eligibility and suitability specific to your circumstances. At USEA, we don’t just look at your taxation exclusively, we focus on the overall outcome to help you meet your business financial and personal needs. Contact Victor now and start planning for your business.

General Advice Warning: This information has been prepared without considering your specific financial, objective or needs. It is prepared for general information; it does not discuss the detail eligibility for each option and should not be interpreted as advise. You should confirm eligibility and consider the suitability to your specific circumstances. We highly recommend that you obtain a professional advice.