Tax Return Time: How to Prepare for the New Financial Year

With the new financial year kicking off next week, it’s time for small businesses to enact their end of year tax strategy.

According to Ben Collins of My Mother Hen, small businesses should be considering the new $6,500 small business write off threshold for assets acquired from 1 July. Assets acquired prior to that date have to be depreciated if they cost more than $1,000.

Small businesses that acquire a new motor vehicle after 1 July can immediately write of the first $5,000 in their 2013 tax return and depreciate the rest in accordance with depreciation limits.

Although super contributions for the last quarter are not due until July 28, if you want to claim the tax deduction in the 2012 financial year, it must be paid by year end.

For the over 50’s the $50,000 contribution limit drops to $25,000 next financial year, and to take advantage of the higher limit this year the contribution must be physically made before year end.

Another tax strategy for those with comfortable cash flow is to defer the issuing of invoices, thereby earning the revenue and paying tax on it in the 2013 financial year.

Deferring capital gains sales and realizing inherent losses can save capital gains tax. Similarly, businesses can bring forward up to one year of prepaid expenses such as rent and insurance.

Businesses owners should be looking for accountants who advise them of this kind of thing well before year end so that a tax minimization can be carefully outlaid and executed by small businesses who are already struggling in a difficult trading environment.