ATCAT Financial
June 2013
Business Tax Strategies
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Year-end tax planning strategies for ongoing businesses
For the 2013 income year, ongoing businesses should be encouraged to adopt one more traditional tax planning
strategies by 30 June 2013 , including the following :
.Accelerating expenditure -This involves bringing forward to the 2013 income year ( i.e., incurring by 30 June 2013 )
, proposed expenditure that is tax deductible ;
. Prepayment strategies - This involves paying certain expenses in advance, by 30 June 2013 (e.g., lease payments,
rent, interest, insurance premiums and subscriptions ), subject to the application of the prepayment rules (discussed
below );
.Accrued expenditure - This involves bringing to account so much of a deductible expense that has been incurred ( in
the 2013 income year )but remains unpaid by 30 June 2013 , as
.Trading stock valuations -This involves recognising reductions in closing trading stock values (e.g ., due to
economic conditions or low consumer demands ) as at 30 June 2013 , thus resulting in higher trading stock deductions
for the 2013 income year.
Checklist tax planning strategies for ONGOING businesses
1. Maximise depreciation deductions for assets purchased in 2012 /13 (and first used or installed ready for use in 2012
/13)
.Claim immediate write - off for depreciating assets costing less than $6,500 ( GST -exclusive , if applicable) and 15%
write - off (as part of general SBE pool ) for all other assets acquired during the income year .
.Claim up to a $5,000 up - front deduction for the purchase of a motor vehicle if $6,500 immediate write -off does not
apply )
Where a business taxpayer is a Small Business Entity ('SBE') turnover less than $2 Million
.Claim immediate write - off where general SBE pool balance as at 30 June is less than $6,500;
.Claim increased deprecation deduction for assets formerly allocated to long - life SBE pool ( 2013 only ).
All other business taxpayers (i.e., non-SBEs )
where assets are allocated to a 'low - value pool ' ( LVP )- Claim an immediate write - off where the LVP balance as at
30 June 2013 is less than $1,000.
.Claim outright deduction for prepayments of business expenses that satisfy the '12 month rule'.
.Claim outright deduction for 'excluded expenditure ' ( e.g., expenditure that is less than $1,000).
.Claim outright deduction for ' excluded expenditure '' ( e.g., expenditure that is less than
$1,000).
3. Prepay certain business expenses ( e. g ., lease of business assets )
4.Claim stock losses using trading stock rules
Revalue any trading stock of the business at the lowest possible value.
5.Claim accrued expenses
Claim any deductible expenses incurred ,but not paid by 30 June 2013
6.Write - off bad debts
write - off any genuinely bad customer debts.
7.Consider entering into a sale & leaseback arrangement
For businesses that are "asset - rich ", consider entering into a sale and leaseback arrangement to improve cash flow .
All other business taxpayers ( i .e ., non -SBEs ) with turnover over $2 Million pa
.If assets are not allocated to a 'low - value pool ' ( 'LVP') - Claim immediate write - off for depreciating assets costing
less than $ 100 (GST - exclusive, if applicable ) and claim depreciation based on effective life for assets costing $
1,000 or more.
. where assets are allocated to a 'low - value pool ' ( LVP )- Claim an immediate write - off where the LVP balance as
at 30 June 2013 is less than $1,000.
2. Maximise depreciation deductions for existing assets ( i . e .,assets held before 1 July 2013 )
Super guarantee
The superannuation guarantee (SG) rate increases from 9% to 12% between 1 July 2013 and 1 July 2019. In addition
the SG age limit of 70 will be removed from 1 July 2013, and employers will be required to contribute to complying
super funds of eligible mature age employees aged 70 and older.