At Smith Shearer, we see tax planning as an essential aspect of managing your tax obligations and payments. It also plays an integral role in our relationship with your business, as it enables us to help you to plan for your upcoming tax obligations (so that there are no surprises) and legally minimise your tax payments.
The benefits of tax planning
Peace of Mind
Tax planning is a legitimate and legal way to minimise your business and personal tax obligations.
It also gives you peace of mind in knowing that you are on top of any cashflow implications prior to June 30.
Saves You Time
The tax planning process is about being proactive with your business strategy to make structured and efficient tax savings.
It also assists you by saving time and money when it comes to your annual compliance work.
Working with your Accountant to devise your business strategy in the lead-up to June 30 is essential for business growth and maximising your return on investment.
Tax planning is a key element of wealth creation.
Pay Less Tax
Nationwide research shows that over 95% of taxpayers can legally reduce the amount of tax they pay.
Tax planning is about reducing your taxable income so that you pay less tax, (i.e. more money in your pocket).
Tax Planning doesn't involve just spending money before the 30th of June, it's about having the right business structure in place and ensuring the increased spending you do undertake is done effectively to benefit you and your enterprise.
What's Included in a Tax Planning Package?
Smith Shearer's aim is to minimise your business and personal tax exposures by legitimate planning and being aware of the changing taxation requirements. This involves developing ideas and solutions capable of being implemented into your business structure.
To achieve these goals we offer:
Preparation of pre 30 June Interim Financial Statements, profit and taxation forecasts
Taxation liability projections including PAYG Income Tax Instalment obligations/variations
Time's Ticking to Claim Under the Instant Asset Write-Off
The instant asset write-off allows small businesses to claim immediate deductions, (up to a limited amount), for new or second-hand plant and equipment asset purchases including vehicles, tools and office equipment.
Until 30th June 2020, the business turnover threshold to access the instant asset write-off has increased from $10 million to $50 million. The federal government has also increased the threshold of the asset from $25,000 to $30,000 during this time period. After 30th June 2020, the asset
threshold may reduce to $1,000 and the business turnover threshold may reduce to $10 million. As we commence the third fiscal quarter, it’s a timely reminder to consider your options for the instant asset write-off as there may only be a limited amount of time remaining to claim this deduction.
The instant asset write-off applies on a Per Asset Basis…
…so that several assets costing less than $30,000 could qualify for the instant asset write-off. Accordingly, it is necessary to consider whether expenditure incurred on the purchase of assets can be allocated to ‘composite items’ (i.e. separately identifiable assets) costing less than $30,000.
Contact your Client Manager (Melissa McKenzie or Cheryl Murdock) or Gavin Smith, to ascertain whether your purchase is able to be identified as a composite item as there are Taxation Rulings providing guidance on this matter.
The instant asset write-off is only available for depreciating assets…
…which are assets that have a limited effective life and that can reasonably be expected to decline in value over time.
However, the following assets are excluded from this definition:
Items of trading stock;
Certain intangible assets; and
Amounts deductible as construction expenditure on capital works
The instant asset write-off applies to the total cost of the asset, not just its taxable portion. For instance, if the cost of an asset is $32,000 and you have determined that the taxable portion of the asset is $24,000, the asset will be ineligible for the instant asset write off as its total cost exceeds $30,000.
To discuss how the instant asset write-off can benefit your small business in the lead up to the end of the financial year, feel free to contact us on (08) 9071 2173.