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2 Weeks Left to Grab Some Tax Benefits

Has your bookkeeper or accountant give you a heads-up on how you’re travelling for this financial year?

If you know how your balance sheet is shaping up, now may be the right moment to do some last minute, end of financial year shopping.

Not only do you have the opportunity to balance your books (for example, purchasing office equipment, machinery, or motor vehicles and claiming some depreciation almost immediately, or withdrawing more funds to top up your superannuation with a personal contribution), but there’s also some great bargains to be had, particularly in the auto industry, where manufacturers like Holden, Toyota, Ford, and Mitsubishi, are vying to sell you their vehicle in a super-competitive market.

At the bottom end of the market, you could drive away with a city car such as the 2013-plated Fiat for $13,000, or a 3-door Hyundai i20 for only $14,990. Toyota are offering 1% finance on their Yaris, as is Nissan on the Pulsar. And that’s just scratching the surface. If you need a work horse ute, Mitsubishi will soon be introducing a new Triton, so you may want to investigate whether it’s worth snapping up a bargain on the current model (on the downside, it’s resale value will be pushed down by the release of the new model, and it’s not as sophisticated as many of the new breed of utes).

In the prestige segment, BMW is offering to reduce the price by an amount equal to the GST; Audi are throwing in sweeteners like 4 years’ free servicing and road side assistance; Lexus is doing 1.8% comparison rate finance on several models; Infiniti is doing 0% finance on the QX70 SUV if you’re prepared to chip in a 10% deposit; and the list goes on.

Superannuation contributions are another key consideration for business owners at this vital time of year, in terms of their legal obligation for their employees, their personal wealth creation, and the issue of tax deductibility. If you haven’t already sought advice from an accountant, do it now!

As a minimum, employers are REQUIRED to pay the legislated Superannuation Guarantee amount (9.25% for the financial year ending 30 June 2014) by 28th July at the absolute latest (it must arrive in the superannuation fund’s account by that date). However, if you wish to claim any superannuation contributions in FY2013-14, then the payments must hit the super fund by 30 June 2014. Likewise, if you want to draw more funds from your business and make a personal superannuation contribution at concessional tax rates, this must occur by 30th June. If you wait until the financial year is over and then consult your accountant, it’ll be too late – get in touch with them now!

Computer equipment is another key area where, if you’ve got a decent profit up your sleeve and some cash in the bank, you may want to go shopping right now. Most of the major vendors (Dell, Lenovo, HP, but of course never Apple) have some attractive deals to try and hook you at this time of year. Depending on how much you’ve already spent this year, and the value of your purchases, you may find that you can in effect write-off the entire purchase in the same period, or a good portion thereof.

This is general information – the choices you make will be shaped by your specific circumstances, but the potential impact is significant so make sure you get professional advice now, and take the correct steps before 30 June to lock in some substantial tax benefits.

 

Need to make an asset purchase before 30th June?

With 30th June almost upon us, you’ve only got a few days to make up your mind on whether or not it’s worth making some last-minute purchases to grab a tax advantage with a handy write-off or write-down of assets in the 2013 financial year.

The Federal Government introduced some valuable amendments last year to the depreciation rules which give small businesses (annual turnover less than $2 million) some significant benefits, effective from this financial year (2012/13). Under these new rules, you can:

  • write off the full value of most depreciating assets costing less than $6,500 each (the limit used to be only $1,000 in prior financial years)
  • pool other depreciating assets in a ‘general small business pool’ and claim a 30% deduction for them
  • claim a deduction for most assets you have newly purchased or acquired, at 15% in the first year, regardless of when during that year you purchased or acquired them

Motor vehicles also get some handy concessional treatment (that includes cars, trucks, scooters, motorcycles, utes and vans, but not items such as tractors, harvesters, road rollers and graders, or trailers).

Small businesses can allocate a vehicle purchase to the small business pool and then also immediately write-off up to $5,000 for vehicles costing $6,500 or more, for the first year they start to use the vehicle. Along with the instant $5,000 write-off businesses can depreciate the remaining value of the vehicle through the general small business pool at 15% for the first year (i.e. $5,000 + 15% of the remaining balance as a deduction in the 2012/13 year) and 30% for the following years.

If you have any questions about eligibility or the benefits for your business, speak to Michelle Mulligan on 1300 622 422.