Tactics for Tax planning for an individual.
The current financial year is nearly about to end, and with a political election to be held in a month’s time eventually the recently introduced government budget measures will, of course, have no opportunity to work until sometime in the next financial year, if at all.
But meanwhile, you may still find numerous methods you might be able to put in perform to make sure you spend not just one penny more tax than is essential for the 2015-16 year.
Tip! The finest taxation planning techniques are implemented in July, not June. That's, as soon as possible in any financial year, not right close to the end of it. And it's also wise to understand that appropriate tax planning is more than just finding bigger and better deductions — the best tips are those that set your tax affairs in better order for not just the current financial year but also for future income years.
Not all of the subsequent suggestions will fit your situations, but as a list of possibilities they might enable you to get thinking along the appropriate track, and also have you asking us the appropriate questions. Obviously, seek advice from this workplace if you want more information.
Several expenses stemming from having a rental property or home are claimable, so it may be beneficial to provide ahead any costs prior to June 30 and claim them in the existing financial year. If you already know that the investment property needs some maintenance or needs attention regarding, say, pest control, see if you can incur these expenses prior to an end of a year.
Prepay investment loan interest
In a similar way, see if you are able to work out together with your finance provider to produce upfront interest repayments for several investments, for example, a margin mortgage on stock shares.
Most taxpayers can claim deductions for approximately Twelve months ahead. But be sure you review how you and your loan provider have allotted funds guaranteed upon your property properly, as a tax deduction is generally only permitted against the finance expenses sustained with regards to earning assessable earnings from investments.
Deductions might not be available on money you redraw from this loan put to other reasons.
Bring ahead costs
Try to bring forward any other deductions (just like the charges mentioned previously) into the 2015-16 year.
Once you know that next financial 12 months you will end up generating significantly less (for example going on maternity leave, going part-time etc), deductible costs that may be brought ahead into the existing financial year will give you much more financial advantage.
An exception for some fortunate individuals will arise if you expect you'll earn more next financial year. In that situation, it might be to your benefit to obstruct any tax-deductible repayments until the subsequent financial year, when the financial advantage of deductions can be higher. Your individual circumstances will determine whether these measures are acceptable and we can help with this.
Make use of the CGT guidelines to your benefit
For those who have created clear and crystallised any capital profit from your investment funds this financial year (which is included with your assessable earnings), consider selling any investments that are presently sitting on a loss of revenue prior to year-end. Doing this means the capital gains you created in your productive investments could be offset against the capital losses from the less successful ones, lowering your overall taxable earnings.
An identical strategy may be implemented for those who have to carry forward capital losses and desire to understand some gains at year end.
Remember that for CGT reasons a funds gain typically happens on the date you sign a contract, not when you settle on a property purchased. When you're making huge funds gain toward the end of an income year, such as selling a good investment property, realising which financial year the gain is going to be attributed to is a great tax planning advantage.
Certainly, with all the previously mentioned, tread very carefully and don’t let mere tax generate your investment judgments – check with this office staff to determine whether your approach will suit your circumstances.
No-one understands your matters much better than yourself, so you'll identify if any of these tax tips relates to your circumstances.
Every individual is required to lodge their return before October 31, but tax agents are generally given more time to lodge, which can be a handy extension to a payment deadline. Of course, if you’re sure you are going to get a refund it’s no use delaying, so in these cases, it is worth getting all of your information to this office as soon as you can after July 1.
To discuss it further, give us a call at 1300 488 330 and talk to our experts at Absolute Accounting Solutions!!
2015 Budget - Small Business what a night!
The Treasurer last night announced the expected reduction of the company tax rate of 30% by 1.5% to 28.5%.
Sole traders, partnerships and trusts did not miss out and will enjoy a 5% tax discount, capped at $1000 per person, per year. This will be given as a tax offset at the end of the financial year.
The hugely unexpected announcement for small business with a turnover of less than $2mil, was the $20,000 immediate tax write off for any new purchase of tools or machinery that the small business will make from 7.30pm May 12, 2015 and June 30, 2017.
While this can be a great for the small business that will make a large profit in a specific year, assisting to reduce their
immediate year's taxable profit. The accelerated write off can have implications later in the event that the small business was to sell or dispose of the asset. The small business will have to pay tax on the whole amount of the sale price as it has been written off. The election of whether to use the immediate tax write off, should be applied by a case by case basis discussed with your Accountant.
Capital Gains Tax (CGT) rollover reliefs was only available to sole traders or partnerships that chose to become a company, new changes will allow a small business (that has a turn over of less tha $2mil) to change their legal structure without triggering a CGT liability from 1 July 2016. The Government has recognised that new small businesses may have chosen an initial incorrect structure that may not be appropriate later when the business is established.
As small business was the highlight of last nights Federal budget, it also addressed the complexities individuals have had with business start-ups. The introduction of one website to provide ease for the registration of a business name, application for ABNs and other Government requirements will all in one place, there will also be an immediate deduction for some of the expenses associated with the starting-up a new business these are professional, legal and accounting advice, this is a welcome improvement.
Thinking about starting a new business?
The new financial year is coming, many people have approached me about starting new business.
To give you a bit of an advantage, I found some information for free business information and courses that the Victorian Government hold to assist new business owners. Understanding what is involved and ideas of how to manage, control and advertise your new business, is one of the most difficult hurdles to get over and accomplish.
Here is a quick link, have a browse of the web site and tell me what you think and if you found it helpful.
Wave Accounting is a free accounting package for the small business owner. So far the testing has been fun. Besides creating your invoices and any other financial document you need, I liked the way you can link your bank accounts to it, so that it is uploaded directly into your Wave Accounting package. Once it is all set up you can download an app to your phone or tablet that allows you to take a photo of your receipts and they too load into your Wave Accounting package.