Five tax tips to help with the end of financial year

Tax time can be stressful so when the end of the financial year comes around it's essential that you are armed with all the necessary knowledge you need.

In order to ensure you are getting the best possible deal out of your tax agreement, here are five tax tips to keep in consideration when your accountant comes down this financial year.

1. Claim as many deductions as are available to you

It is already common for SME owners and individuals to claim whatever deductions they are aware for the benefit of their business. However, it is still equally common for them to miss a host of deductions that could be further exploited.

It's important to remember that you don't necessarily have to make payments on an expense to claim it on your tax return. As long as you have the financial liability in your accounting statements the deduction can be claimed.

2. Claim on home office supplies

If you are operating a business from inside your home you should carefully consider what items can be used as a deduction. Items such as stationary, supplies, software and equipment can be deducted. However, larger piece of equipment, such as computers, won't be able to be fully deducted. Deductions can still be made, but you will need to deduct the depreciation of the equipment first.

For more information on what can be deducted based on the industry you operate in, visit the ATO website.

3. Prioritise your deferrals

Deferring your liability can be a great way to offload the additional tax burden and deal with it next financial year. Some deferrals will provide a more permanent long term benefit and for others it may be a case of deferring the tax liability to the next financial year. In this case it may be worth creating a hierarchy of your deferrals and deciding which ones will provide the best long term benefit for your business.

4. Use a card for your expenses

If you are one of those people that struggle to maintain and keep hold of all your expense receipts we have good news. The ATO now recognises bank statements as a proof of claim. Therefore,it's in your best interest to make purchases with either a credit card or through eftpos to ensure you have the records available for tax-deductible expenses.

5. Understand the risks

When making decisions come tax time you should always be mindful of any risks that may affect your business. The decisions you make could impact not just your tax, but also your funding and business operations. Therefore, it is essential that you weigh up your tax benefits based on a risk to reward matrix and determine the overall benefit in comparison to the risks present.

 

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