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Tax Tips for the End of the 2017 Financial Year

Here are our tax tips to maximise your taxation position for the year ending 30 June 2017:

  • Advise us of bad debts (those debts older than 12 months and where you have made all reasonable attempts to collect the debt, e.g. engaged a formal debt collection agency). Businesses can claim the GST back if registered on an accruals basis for GST.
  • Small Business (those with an aggregated turnover under $10,000,000): If you need plant and equipment valued under $20,000, consider buying it before 30 June 2017 to take advantage of a complete tax write off in the year purchased. 
  • Scrap obsolete plant and equipment. Go through your depreciation schedule and determine what is obsolete and advise us when you bring in your accounting records for the 2017 financial year. 
  • Start-up businesses will now be allowed to deduct professional expenses, such as setting up a company structure or paying an accountant, immediately when they start a business.
  • Prepayment of Expenses: Small businesses (those with turnover under $10,000,000) can make prepayments up to 12 months in advance. For other businesses, the prepayment must be less than $1,000 in value for each prepayment. 
  • Directors’ Fees: Providing they have been minuted, hence an obligation exists to pay director’s fees, and provided they were paid within 3 months after 30 June 2017, these fees can be accrued and are tax deductible in the 2017 tax return.
  • Pay employee superannuation before 30 June 2017 (to meet your statutory obligations you must pay the last quarter’s super prior to 28 July 2017 but you will only receive a tax deduction in the 2017 financial year for payments actually made by 30 June 2017). Payments made after the 30 June but before 28 July 2017 will be deductible in the 2018 financial year. Payments made after 28 July are never tax deductible and may be subject to the superannuation guarantee levy (which also is not deductible). 
  • If you were 49 years of age or older as at 30 June 2016, your maximum tax deductible contribution payable into superannuation is $35,000 in the 2017 year, otherwise it is $30,000. Speak to us to ensure you pass the 10% rule. It's proposed to reduce the concessional contribution limits to $25,000 and allow catch up contributions of unused caps over 5 years for balances of $500,000 from 1 July 2017 (2018 Financial Year). Taxpayers who receive more than 10% of income from employment or business and have an “adjusted taxable income” of less than $37,000 will receive a tax free contribution to their superannuation fund from the Australian Taxation Office of up to $500 based on the level of your contribution. 
  • Taxpayers who receive income of $300,000 or more will have their tax deductible superannuation contributions taxed at 30% rather than 15%.
  • Rent, dividends and interest are only taxed in the year they are received. This can create an opportunity for deferral.
  • Value trading stock (stock take): This should be valued using the most advantageous method (the lower the better) by using either cost, market value or replacement value.
  • Scrap obsolete stock prior to end of year stock take.
  • Look to benefit from the CGT small business and retirement concessions (speak to us regarding this). These concessions apply to businesses with a turnover of less than $2,000,000.00 only.
  • Review the June 2017 PAYG instalment obligation when it is received to see if it can be varied down. This will potentially be possible when the profit in 2017 will be less than in 2016.

Company Tax Rates

Small Business (those with an aggregated turnover under $10,000,000) will have a tax rate of 27.5% for the 2017 financial year and dividends will be franked at 27.5%.

End of Year Helpful Hints 

Here is a non-exhaustive list of things to do as at 30 June 2017, although many of them could be automatic depending upon your software:

  • Carry out a stock take as at 30 June 2017 (using one of the three methods mentioned above).
  • Calculate work in progress (if applicable). Should you need help with this process, please don’t hesitate to call.
  • Record a list of accounts receivable as at 30 June 2017.
  • Record a list of accounts payable as at 30 June 2017.
  • Prepare bank reconciliations and attach copies of bank statements to them.
  • List plant and equipment bought, sold or scrapped during the year.
  • Prepare copies of lease/loan agreements for all assets acquired under finance during the year.
  • Make trust resolutions by 30 June. As always, trustees of discretionary trusts are required to make and document resolutions on how trust income should be distributed to beneficiaries for the 2016-2017 financial year by 30 June. 
  • Please ensure Superannuation minimum pension payments have been paid prior to 30 June 2017.
  • Division 7A minimum loan repayments should be made prior to 30 June 2017.
Contractor Payments
Contractor Payments: If you are a business that is primarily in the building and construction industry with an A.B.N. and you make payments to contractors for building and construction services, you need to report the following details each financial year for contractors you have paid:

  1.  ABN, if known
  2. Name
  3. Address
  4. Telephone Number
  5. Gross amount you paid for the financial year (this is the total amount paid inclusive of GST)
  6. Total GST included in the gross amount you paid

You are considered to be a business that is primarily in the building and construction industry if any of the following apply:

(a) In the current financial year, 50% or more of your business income is derived from providing building and construction services.

(b) In the current financial year, 50% or more of your business activity relates to building and construction services.

(c) In the financial year immediately before the current financial year, 50% or more of your business income was derived from providing building and construction services.

If you require more detail, please contact our office.

We hope you find this information useful. Please feel free to contact us should you have any queries. We are only too happy to help.

 Team EEA  

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