Take advantage of Tax Saving before the year ends!
Tax planning should be done on a regular basis throughout the year, but if you have been busy see us today to get your 2019 Tax Savings in order! Book online now to have a Tax Planning meeting and save tax this year!
- Reduce your home loan
- Top up your super
- Have a holiday
- Deposit for an Investment Property
- Upgrade your Car
- Invest in new passive income assets
IS YOUR BUSINESS A “SMALL BUSINESS ENTITY”?
Small businesses can access a range of tax concessions from the ATO. To qualify as a “Small Business Entity”, the business must have an aggregated turnover (your annual turnover plus the annual turnover of any business connected/affiliated with you) of less than $2 million and be operating a business for all or part of the 2018 year.
Your business structure could be eligible with the company tax rate for businesses with less than $10 million turnover is 27.5% for the year ended 30 June 2019.
If you use a Trust structure, one strategy is to allocate profits to a “Bucket Company” and cap your tax at 27.5% for the 2018 year. Note that this company must have business operations to qualify for the reduced company tax rate, but if not it’s still only 30%, which is much less than most people that earn more than $38,000 a year. Bucket company can be a great way to save tax when used correctly and can even get used as another vehicle to invest and or make more money.
It’s important to make this decision before thee years end so you can make the correct Trust Distributions meeting before the years’ end.
If your business is a Small Business Entity, the following tax concessions apply in 2018:
- Depreciating assets valued at less than $30,000 will be immediately deductible
- Depreciating assets valued at more than $30,000 will be depreciated in one pool at a rate of 15% in the first year and 30% in future years
- If your pool balance at the end of the year is less than $30,000 before applying any other depreciation deduction, the entire pool balance can be written off.
You should buy these assets before 30 June 2018 to take advantage of this. As always buying things for the sake of saving tax is not always the best process to follow, but if you need a new asset anyway, now could be a great time to take advantage of the instant write off.
Along with this new benefit, your business might even be able to deduct the whole amount left in your asset pool if it’s now under $30,000 at years end. So buying more assets to add to the pool could prove counterproductive if purchased before June 30 rather than after. If you increase the pool value you could end up paying more tax than if you waited just a couple of weeks until July 1.
If your business is not a Small Business Entity, you will need to Depreciate all assets purchased over $300. Any assets purchased for $300 or under can be immediately deducted.
This article is provided as general information only and does not consider your client’s specific situation, objectives or needs. It does not represent accounting advice upon which any person may act. Implementation and suitability require a detailed analysis of a client’s specific circumstances. © Business Edge Accountants