Guest BLOG: Theresa O’Connor from Concord TBS Accounting
Are you a PRIVATE PRACTICE owner? Dreading TAX TIME? It’s creeping up you better read on…
Contact Theresa at Concord TBS for further tailored accounting advice here
Is It Possible To Save Tax & Have Fun?! It Sure IS!
With the end of the financial year just around the corner employees and business owners will be thinking about what they can do to save tax. Saving tax should not be your number one priority though. Any purchase you make must also make good business sense. Is it going to enhance your business, you or your life? And do you have the cash.
You can save tax in the current financial year if you defer income to the following year and bring forward expenses to the current year. If you are expecting the following financial year to be lower compared to the current year this could be a good strategy.
If you are a small business with turnover under $2,000,000 you can claim prepaid expenses up to 12 months in advance. This could include, interest, insurance, utilities, rent etc.
Review your creditors and write off any bad debts prior to 30 June, 2017. This will only work for you if you are an accrual based taxpayer.
Pay your employer superannuation contributions in June. The contributions must be received by the superannuation fund before 30 June.
An immediate deduction is available for assets costing less than $20,000 and first used or installed ready for use this financial year. This was due to finish on 30 June, 2017 but the latest budget has seen this deadline extended into next financial year.
Some of the more fun ways to save tax include:
Airport Lounge Membership
If you are an employee and more than 50% of your air travel is for business the full amount of your airport lounge membership is tax deductible. The substantiation requirement for this is to keep a diary showing all your air travel. However, if your travel is 50% or less for business you will only be able to claim that percentage of your membership fees.
On the other hand if you are a business owner the ATO has determined that the full membership for an employee is tax deductible. The reasoning behind this is that the employee’s productivity is increased due to the benefits of the membership.
Average tax deduction $750
Meals and gifts
While most entertainment costs are not tax deductible the following generally are:
- Tea, coffee and snacks provided on business premises
- Snacks consumed during a business meeting or training session at the business premises
- Meals provided for employees who work overtime
- Meals and accommodation while on a business trip
- Meals provided while attending a seminar as long as the seminar is longer than four hours.
- Inexpensive gifts(generally under $100) which will be consumed by employee at home. This could be a food hamper or bottle of wine
Average tax deduction $2,000
Overseas Conferences, Courses and Study Tours
Where your overseas conference, course or study tour enables you to be more proficient in your current income earning activities or is likely to lead to an increase in the income from your current income earning activities your travel expenses will generally be tax deductible. The key is that it must directly relate to your current employment or income earning activities and the purpose of the trip must be for business related activities.
If you want to add a private holiday onto your trip the ATO has stated that as long as the main purpose of the trip was to attend the conference then 100% of the airfare is tax deductible. However, if the main purpose of the trip is for private purposes then the ATO does not allow a deduction for the air travel. If the purpose of the trip is 50% for the conference and 50% private, then only 50% of the airfare is allowable. An apportionment of accommodation, meals and incidental travel expenses will also be required for any private activities.
Average tax deduction $10000
The advertising and signage portion of the cost is 100% tax deductible. However, the remainder is not and only a percentage of the remainder is tax deductible. It could be 50% private with the remainder subject to Fringe Benefits Tax.
Average tax deduction $10,000
Antique, Veteran or Vintage Car
Depreciation and running expenses for Antique, Veteran or Vintage cars are allowable for the percentage of their business use. A logbook must be kept for substantiation. See TD 200/35
Average tax deduction $15,000
Pets in the Workplace
Under certain circumstances the expenses incurred for a workplace pet are tax deductible. However, the initial purchase of the pet is considered to be capital nature and therefore not deductible.
Average tax deduction $1,500
X-Box, Foxtel, and Pinball Machines
The workplace is changing and the ATO recognises that the inclusion of entertainment related items in the workplace increases employee productivity. Therefore the purchase of items such as pinball machines, X-box and Foxtel for employee use during their breaks is tax deductible for business owners. If these items cost less than $20,000 and are purchased prior to June 30, 2017, the business will receive an outright deduction in the 2017 financial year.
Average tax deduction $5,000
Health Coaching, Lifestyle and weight loss
Efficiency at work can be improved by counselling related services and therefor a tax deduction is allowed for business owners for these items. This may be for weight loss, to quit smoking, health and fitness, stress management or drug and alcohol abuse. However, these services must be available to all employees.
See CR 2006/70 – Weight Watchers at work Program & TD 93/153 – Outplacement services and CR 2011/41
Average tax deduction $2,000
If you are interested in any of these tax saving strategies please contact your accountant to see if they are right for you.
If you have a PRIVATE PRACTICE, keep a look out for our VIRTUAL CONFERENCE FOR PRIVATE PRACTITIONERS coming soon!
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