It’s hard to believe, but tax time is fast approaching, meaning it’s time to organise your important financial information and prepare it for the ATO.
For sole traders and SMEs, tax time can be daunting. Trawling through financial information, accurately recording expenses and meeting your tax obligations is an annual headache. But there are devices you can use to make life easier, while maximising your tax return at the same time.
In this post we compile advice from some of Australia’s leading financial experts to take the terror out of tax-time and help you manage your financial documents.
Securing Your Super
When tax-time rolls around, “super is an oldie but a goodie” Grant Field, chairman of accounting firm MGI, told SmartCompany.
He advises that there has been a ‘slight increase’ in the superannuation concessional contribution limit, from $25,000 to $30,000. The limit remains at $35,000 for those aged 49 and over.
Field says the savings to a ‘typical mum and dad business’ that maximises its super contributions can be substantial, as contributions into your super fund are taxed at 15%, rather than closer to 50% if you are paying the top personal income marginal tax rate on those earnings.
“There’s still significant savings to be had by maximising your super contributions limits,” Field says.
And for those with a self-managed super fund, Field says “transferring surplus wealth into super can be an excellent tax strategy”.
Field says individuals can contribute up to $180,000 a year into superannuation as non-deductible contributions and it is possible to bring forward up to three years worth of contributions, which would give a total of $540,000.
“If a mum and dad each put $540,000 each into a self-managed super fund, that’s more than $1 million for the super fund to invest,” he says.
20,000 Cool Reasons To Invest In Office Assets and Supplies
One of the best ways to minimise your tax bill is taking advantage of the government’s $20,000 asset write-off scheme, which was introduced in 2015. In simple terms, the new legislation allows businesses with an aggregate annual turnover of less than $2 million to claim deductions on assets of up to $20,000. Under previous rules the cap was $1,000, making the scheme a significant tax benefit for sole traders, small businesses and SMEs.
ATO Deputy Commissioner Steve Vesperman said the scheme is backdated to Tuesday 12 May 2015, and applies until 30 June 2017.
Small businesses taking advantage of the new measure will need to pool other assets over $20,000 or more and depreciate these assets at a rate 15 per cent in the first year and 30 per cent each year thereafter.
“It is also important that small businesses keep records of their purchases to claim their deduction,” Mr Vesperman said. “The ATO will be working with small businesses looking to use the immediate deduction to ensure they are appropriately claiming it.”
Want to take advantage of the asset write-off scheme? Check out our range of tax-deductible printers, scanners and multifunction devices.
Aside from taking advantage of the $20,000 asset write-off scheme, Michael Quinn, Chartered Accountant and co-founder and Director at The Quinn Group, advises that small businesses should make use of all other deductions at their disposal.
“There are lots of rules around what can be claimed as a tax deduction for small business owners,” he tells FlyingSolo. “You’re entitled to claim tax deductions for some expenses that are directly related to earning your income.”
This could involve bringing forward deductible expenses such as repairs and maintenance into the current year or prepaying monthly costs such as rent, electricity, wages and utilities.
Other deductible expenses may include running and occupancy costs associated with operating a home office and motor vehicle expenses.
“You can claim vehicle and other travel expenses directly connected with your work but not for normal trips between home and work, which are considered private travel,” he says. “For example, if you travel to and from work every day by train, you cannot claim your train ticket. However, if one day you travelled by train to a different location to attend a work-related seminar, for example, you can claim the cost of your train ticket for that day.”
Use The Right Tools
Using online tools to organise your invoices, receipts and other relevant paperwork could not only save you time before June 30, it could also have longer term benefits for your business’ bottom line according to Sophie Hossack, country manager at Receipt Bank.
“You would be shocked at how many small business owners don’t properly track expenses, invoices and customers payments,” she says.
“If you’re not keeping proper records that you can make sense of at a glance, it could be months before you realise you have outstanding invoices, or worse, miss payments altogether.”
Find out how Fuji Xerox scanners can be your saviour at tax time by helping organise your documents - download the free ebook.
Read how Fuji Xerox Business Solutions have helped other Australian businesses