Its tax time! But 1 in 5 would rather clean toilets than complete tax returns
A shocking with one in five small business owners claim they’d rather clean the workplace toilet than tackle their tax return, according to Dick Smith Productivity Study.
Other would opt for cleaning work windows, buy their workers lunch (for a month), firing staff over getting to drip with the dreaded tax return. Dick Smith study polled over 250 small business owners.
Part of this fear may be due to small business owners’ confusion over what tax breaks are available.
Dick Smith’s poll also revealed that over a third find the process too confusing or preferred to leave it all to their accountant, or don’t know details of tax breaks.
Taxation expert Adrian Raftery, says small businesses should take the time to understand the tax breaks available.
“The ATO is ready to subsidise these improvements by offering an immediate tax write-off for new equipment purchases of up to $6,500. The Dick Smith research showed that one in four small business owners claimed they would be more likely to take advantage of this this rebate once they knew of its existence.
“It’s in the best interest of small businesses to bring their knowledge of tax-time concessions up to speed,” says Raftery, principal of Mr Taxman.
Raftery has prepared some top tax tips for small business owners to follow:
1. Make the most of new small business entity (SBE) tax concessions
Small businesses can now immediately write-off of new business assets that cost less than $6,500. These assets include computers, monitors, security systems and printers. There is no limit to the number of assets that you can purchase under this concession. If your business is registered for GST, the immediate write-off limit for buying a business asset increases to $7,150, as you can claim the 10 per cent GST credit and get an immediate write-off for the balance in this year’s tax.
2. Minimise your tax bill by moving money into super
Small business owners can have their business contribute up to $25,000 per year into super, which is only taxed at 15 per cent within the fund, and claim a tax deduction for the contribution. Note: In order to obtain a tax deduction on your next return, the money must to be received by the superannuation fund by 30 June.
3. Scrap obsolete stock or plant and write-off those bad debts
Got some old plant or stock that your business simply can’t sell or have debts you can’t collect? Then physically write them off before 30 June and get a tax deduction for it this year. Note that the debt must have been originally shown as income in order for the write-off to be allowed. You need to put your decision in writing and show that you have made a genuine attempt to recover the debt to prove that it is bad.
4. Defer income and bring forward expenses up to 12 months in advance
Defer your taxable income to next financial year by, where possible, delaying the receipt of cash income and deferring invoicing till next year. An immediate deduction is also available to SBE’s for the prepayment of allowable deductions (such as lease payments, interest, rent, business travel, insurances and subscriptions) up to 12 months in advance by 30 June.
5. Claim back last year’s company tax paid from the taxman
Previously, tax planning has been restricted to smoothing taxable income against future years. However under the proposed new “carry-back tax loss” legislation, companies will be able to incur revenue losses up to $1 million this year (subject to its franking account balance) and receive a refund for tax paid last year.
Note: this concession is not yet passed in Parliament and is only available to companies and not businesses operating as a sole trader, partnership or trust.