For businesses to maximise their cash position, they should consider the following tax planning opportunities before 30 June.

Prepay expenses before the end of the year:

• If turnover is < $10m, you can claim 100% deduction in the year an expense is paid

Bring forward the purchase of plant & equipment if you are a small business:

• Equipment costing less than $30k, installed and ready for use by 30 June 2019 will be fully tax deductible in the current year

Maximise superannuation contributions:

• Super is only deductible if paid by 30 June

• Annual concessional contribution caps are $25k

• Salary earners can now make concessional member contributions as the previous restriction (10% rule) no longer applies

Write off bad debts:

• If debts are not recoverable, and all action has been taken to resolve then write off the bad debt before 30 June to bring to account the expense

• Ensure GST is adjusted

Write off slow-moving or obsolete stock

• Review your stock holding

• If the market value is lower than the cost of the stock, a deduction can be realised for the difference

Utilise unrealised capital losses:

• Ensure you take advantage of capital losses within your group

• Consider whether distribution minutes can be prepared in a way to utilise group losses

Review plant & equipment:

• Review depreciation schedule for any scrapped plant & equipment that can be written off

• Review the effective lives of equipment and consider whether appropriate to increase rate of depreciation

Review remuneration to owners:

• Are dividends or profit share a more appropriate way to remunerate business owners

• If the business is making a loss, you could be unnecessarily paying tax on wages

Repayment of Div 7A loans:

• Cash repayments can reduce the requirement for dividends to be declared

Review tax rate applying to companies:

• Base rate companies pay tax at 27.5% while all others pay tax at 30%

• Review any planning that could occur to achieve the desired tax rate (may be lower to reduce tax, may be higher to maximise franking credits on dividends)

11. Claim and document your Research & Development activities:

• When engaged in R&D activities, clearly document the activities and costs relating to those activities to take advantage of R&D Tax Offsets

Review your tax position prior to 30 June:

• Understand your options to reduce or defer tax

• Plan the cash flow for instalments of tax, and the tax due on lodgement of tax returns

• Identify opportunities to vary tax instalments and improve cash flow

• Implement above tax planning and other savings

• Finalise trust distribution minutes before 30 June

Please do not hesitate to contact your friendly Harris Black team member for help with your tax planning.

Legislation originally introduced in March 2017 to supplement the “same business test” with a more relaxed “similar business test” has finally been passed. The test will be used to work out whether a former company’s tax losses and net capital losses from previous income years can be used as a tax deduction for a new business in a current income year. It also is relevant to whether a company joining a consolidated group can transfer its losses to the head company of the consolidated group.

An extra 44,000 taxpayers have been hit with the additional 15% Division 293 tax for the first time on their superannuation contributions for 2017–2018. This is because the Div 293 income threshold was reduced to $250,000 for 2017–2018 (it was previously $300,000).

Individual taxpayers with income and super contributions above $250,000 are subject to an additional 15% Div 293 tax on their concessional contributions.

Taxpayers have the option of paying the Div 293 tax liability using their own money, or electing to release an amount from an existing super balance, which means completing a Div 293 election form.

The ATO has recently started referring taxpayers with overdue lodgement obligations to an external collection agency to obtain lodgements on the ATO’s behalf. External collection agencies will focus on income tax and activity statement lodgements, and referral to an external collection agency doesn’t affect a taxpayer’s credit rating.

If your case is referred to a collection agency, the ATO will notify you in writing before phoning you or your authorised contact to negotiate lodgement of the overdue documents and request payment of any debt.

Tip: If your tax return or other ATO paperwork is overdue, don’t panic! We can help work out what you need to do next, and even make arrangements with the ATO on your behalf.

The ATO is warning taxpayers to be alert for scammers impersonating the ATO, using a range of new ways to get taxpayers’ money and personal information.

While the ATO regularly contacts people by phone, email and SMS, there are some tell-tale signs that you’re being contacted by someone who isn’t with the ATO. The ATO will never:

• send you an email or SMS asking you to click on a link to provide login, personal or financial information, or to download a file or open an attachment;

• use aggressive or rude behaviour, or threaten you with arrest, jail or deportation;

• request payment of a debt using iTunes or Google Play cards, pre-paid Visa cards, cryptocurrency or direct credit to a personal bank account; or

• ask you to pay a fee in order to release a refund owed to you.