As the end of the financial year approaches, it’s a good idea for small businesses in Australia to start thinking about how they can make the most of the opportunities it presents. There are a few things businesses can do to help reduce their tax liabilities and improve their cash flow, and we’ve put together some tips to help you prepare.
One of the most significant incentives available to small businesses is the instant asset write-off. This allows eligible businesses to immediately deduct the full value of assets purchased and installed before 30 June, up to a threshold of $150,000 for businesses with an annual turnover of up to $5 billion. It’s worth considering investing in eligible assets before the deadline to take advantage of this incentive is reduced. Remember, assets need to be installed and ready to use to be eligible for this deduction.
Another important consideration is superannuation contributions. Employers are required to make contributions on behalf of their employees, which are deductible and can help reduce tax liabilities. To ensure you can claim the deduction, make sure you pay the June quarter contribution before 30 June and keep accurate employee records. If you are a sole trader or in a partnership, you can claim up to $27,500 of your super contributions as a tax deduction – but don’t forget to lodge a ‘Notice of intent to claim or vary a deduction for personal super contributions’ with your Super Fund. Ensure you speak to your accountant before doing so, to make sure there aren’t other considerations in play!
For businesses that hold stock, purchasing before EOFY can help reduce taxable income. Don’t forget to prepare a stock take on 30 June! This will help you make informed decisions about stock levels and avoid any issues with inventory management.
Overall, preparing for EOFY can be a helpful way to take advantage of tax incentives and improve cash flow for small businesses. Seeking professional advice from a qualified accountant or tax agent can also be beneficial to ensure that all tax obligations are met and to explore any available incentives.