Tax planning is a year round activity however our focus becomes heightened around this time of year. For your benefit and as a timely reminder, we have listed below some year end strategies 

Please take some time to consider the alternatives and options below and please contact your C&J advisor should you wish to discuss a more specific scenario.

General Year End Tax Planning Considerations:

• Trade debtors – Review aged debtors listing prior to 30 June and give consideration to the collectability of debtors. The decision to write off bad debts should be documented prior to 30 June and the accounting systems updated accordingly Consider deferral of billing (for accrual based tax payers only) to the 1 July for clients or customers who are notoriously bad payers.
• Stock Valuation – Stock is required to be valued at the end of the income year at its cost, market selling price or replacement value. There is no obligation to use the same method for each item of stock. Therefore consideration should be given to the valuation methodology for each stock item. For your reference, the definition of each method is as follows.

• Cost – is the cost of acquiring the trading stock plus any further costs in getting it into its existing condition or location.
• Market Selling Value – is the current selling value of the item in your selling market.
• Replacement Value - is the cost of replacing the particular item.
• Obsolete Stock – You may also elect to value an item of stock below the values determined above, if it is warranted, because of obsolescence or any other special circumstances.

• Trade Creditors – Review trade creditors as at 30 June to ensure all invoices have been received and accrued (posted to your accounting system) for goods and services provided during the period ended 30 June.
• Staff Superannuation – In order to obtain an income tax deduction for superannuation, the payments must be cleared from the company bank account by 30 June. Ensure superannuation for all staff is up to date and paid prior to 30 June.
• Director Superannuation – Contributions for directors may be made up to the age based deduction limits and again must be cleared from the company bank account prior to 30 June. The relevant aged based limits are:
  

• Aged 50 years and over - $50,000.00
• Aged up to 49 years - $25,000.00

Note: These contribution levels are for each individual and that the rates levels apply in the year in which the employee turns the relevant age, so long as the final contribution of the year is paid after that birthday. For example, if an employee turns 50 on the 31 May, then so long as the last contribution for the year is made after 31 May, then the higher limit of $50,000.00 will apply.

• Bonus Payments – Bonus payments will be deductible, even though the physical payment is not paid until the following year, if, prior to the 30 June, the company is definitively committed to the payment of a quantified amount. This will be evidenced by reference to employment contracts and directors resolutions.
• Asset Schedule Review – The asset register of the company should be reviewed on an annual basis prior to 30 June to determine whether there are any items present on the listing which have been scrapped since the last review, and need to be written off in the accounts of the company prior to 30 June.
• Government Co-contributions - Those with an assessable income less than $61,920.00 can benefit from the government co-contribution scheme by making an additional contribution to super with ‘after tax money’ (up to $1,000.00) the Government will also contribute up to $1,000.00 to their super fund.
• Spouse Contributions - Where a spouse has an assessable income below $13,800.00 a tax rebate up to $540.00 can be received by their spouse who contributes to super with after tax money on their behalf.
• Capital Gains Tax “Wash Sales” – gone are the days when the strategy was to crystallise a capital loss on shares and then buy the same stock back almost immediately. The ATO view this as an anti-avoidance strategy nowadays so you might do well to heed the advice and leave it out of your tax planning.
• Capital Allowance & Depreciation Schedules for Investment Properties – Are you maximising your tax deduction for depreciation of your investment property? If you have a property that was constructed after 1 July 1985, or even renovated since that date, you may do well to commission a quantity surveyor to produce an extensive depreciation schedule for your property and even any eligible assets attached to the common property that you effectively have a pro-rata ownership interest in. The cost of the report is tax deductible and the tax savings from the depreciation claim will generally recoup the after-tax cost within the first year.
• Prepayments – Small Business taxpayers in the SBE system are eligible to make prepayments of expenditure prior to 30 June and claim a tax deduction.  You could consider a prepayment of rent or interest.  Please contact your C&J partner to confirm your eligibility for this before making any payment.

Should you wish to discuss any of the above please do not hesitate to contact your C&J advisor.