Northern Beaches Tax Beat
How to Minimise Northern Beaches Business Tax for the Financial Year Ended 30 June 2009
Article By Paul Bailey Northern Beaches Accounting Expert
Who said the world of accounting and taxation was the domain of boring, baldy headed men. It’s attracted a whole new world of people, who don’t need to use their personalities as a form of contraception. Especially this year, because what I am about to tell you actually contains some new and exciting opportunities specific to the current financial year. Yes, we have some new opportunities to reduce our businesses’ tax burdens. Ladies and gentlemen, the next five minutes reading may just change your Northern Beaches Business Life … for the better.
New Opportunities – Specific to the year ended 30 June 2009
The Small Business Tax Break
Small businesses i.e. turnover of less than $2 million, will be able to claim a ‘bonus’ tax deduction of 50 per cent of the cost of eligible assets ordered between 13 December 2008 and 31 December 2009, and installed by 31 December 2010.
Small Business Assistance
The Government will provide $10 million over two years to establish a Small Business Support Line, which will link to Business Enterprise Centres and provide initial advice and referral services for small business on matters such as obtaining finance and cash flow management. The ATO will also receive $168 million to assist small businesses and help them remain viable.
Increase to Medicare Levy Surcharge
The Medicare Levy Surcharge for singles will increase from $50,000 to $100,000, and from $100,000 to $150,000 for families, with effect from 1 July 2008.
Education Tax Refund
Families receiving Family Tax Benefit (Part A) with children attending primary or secondary schools, or who receive Youth Allowance will be eligible for an education tax refund.
Eligible families will be able to claim a 50 per cent refund EVERY YEAR for key expenses up to:
- $750 for each child attending primary studies (maximum offset $375, per child, per year)
- $1,500 for each child attending secondary studies (maximum offset $750, per child, per year)
Child Care Rebate
From 1 July 2008, the child care rebate for out of pocket child care expenses will increase from 30% to 50%. The maximum out of pocket child care expenses have also increased from $4,354 per child to $7,500 per child per year – and will be indexed.
Car Expenses
There are four methods of claiming car expenses. They are:
- Cents per kilometre
- 12% of original value
- One-third of actual expenses
- Log book
Methods 1 and 4 are the most common. Method 1 is usually used when business use car travel is 5,000 kms or less, or you don’t have the receipts to substantiate your claims using the log book method.
A log book is a written record of the business use of a car over a period of at least 12 continuous weeks. If the car is owned or leased for less than 12 weeks, the log book needs to be kept for that entire period. The 12 week or shorter period may overlap the beginning or end of an income year so long as it includes at least part of a year i.e. a taxpayer can choose which 12 consecutive weeks in which to keep a log book. If a taxpayer wishes to use the log book method for two or more cars in the same income year, the log books must cover the same 12 week period. Log book entries do not have to be signed.
A new logbook must be completed every five years.
Medical Expenses Offset
Don’t forget your net medical expenses if they exceed $1,500. Annual net spending information can be gathered from Medicare, your Private Health Insurer, your Pharmacies, and Health Care Providers. Taxpayers receive as an offset 20 per cent of their out of pocket amount above the first $1,500.
The Simplified Tax System
Simpler depreciation rules
Generally, you can pool your assets to make depreciation calculations easier and also claim an immediate deduction for most assets costing less than $1,000.
Simpler trading stock rules
You can choose whether or not to do an end-of-year stock take if the value of your trading stock has not increased or decreased by more than $5,000 over the year.
Immediate deduction for certain prepaid business expenses
You can claim an immediate deduction for prepaid business expenses where the payment covers a period of 12 months or less that ends in the next income year.
Entrepreneurs’ tax offset (ETO)
The entrepreneurs’ tax offset may reduce your tax payable by up to 25% where your business has turnover less than $75,000.
The Time Honoured Methods of Reducing Business Taxable Income
- Delay invoicing/banking income before year end (which method you use will depend on whether you declare your taxable income on a ‘cash or accruals basis’)
- Invoicing/paying expenses (which method you use will depend on whether you declare your taxable income on a ‘cash or accruals basis’)
- Write off bad debts before 30 June 2009
- Prepay expenses before 30 June 2009
- Pay superannuation contributions on or before 30 June 2009
Disclaimer: This article is for general guidance only. It cannot automatically be relied upon as a basis for action. If you want to act on the advice contained in this article please speak to your taxation adviser or the author personally. Some aspects of this article are summaries of recommended actions. Readers require more detail before adopting the recommendations contained in this article.
Article By Paul Bailey Northern Beaches Accounting Expert
