Best Tax Moves for your business in 2019
Tax season is the time to start dealing with the government agency. While submitting tax forms is never fun, it is still very important to take some time leading to the tax season to critically think about the situation. You still have time to reduce your business income tax bill significantly.
Not sure where to start with your tax, we got you covered. To help take some of the pressure off you, we have compiled a list of the best tax move for 2019 to help you get your claims perfected and affairs in order before it is too late.
1. Get the appropriate deductions
A standard recommendation for small to medium-sized business owners is to make sure they are claiming all the appropriate deductions they can at tax time. Some of these include things like repairs, utilities, or rent for your business. Often, tax agents recommend business owners to bring forward as many expenses as possible.
However, both the Australian Taxation Office and Sunshine Coast tax experts have urged business owners to be sure that they can justify the expense. But the expenses have to be related to your income, and you have to be able to show the tax agents how you calculated your claims.
2. Take advantage of the instant asset write-off
The start of the year is an excellent opportunity for you to assess which asset purchases may possess great tax implication for the financial year. This year, you will be able to access the instant asset write-off, and if you approach it correctly, you can get considerable savings. However, leaving this decision too late might not be helpful because by then, you will start making bad decisions and buying assets that don’t have any useful tax implication.
So, if you need to buy assets, make sure you look at the numbers to see if they can offer tax benefits. According to some data, several small to medium-sized companies fail to take full advantage of the asset write-off, some small business owners even forget to use it all together, so start planning.
3. Understand the Capital Gains Tax (CGT) changes
The Australian government has provided clarity for SMEs how the small business CGT concessions will be changing when small to medium-sized business owners sell their businesses. One of the most significant changes is that not only will you as a business owner have to pass a six million dollars net asset test, where your total net assets must be below six million dollars, your business itself also needs to give the same test.
The government originally planned to implement this legislation with hindsight to July 2017 but went back on the decision when it was revealed that some entrepreneurs would have been left with $500,000 tax bills unwittingly. The government later passed the CGT concessions legislation which provides certainty and a bit of relief for business owners who are facing hundreds of thousands of dollars in surprise tax bills. Now, small business owners can take advantage of the CGT concessions when they sell their business as they can get a part or all of their capital gains tax if they meet the required criteria.
4. Use the income tax offset
In the case, your small or medium-sized business is unincorporated, it is possible that your business can be eligible for a small business income tax offset. This means if your revenue is under five million dollars, you can get up to one thousand dollars off your tax bill. The offset is currently 8 percent of the tax payable on a business income, but this is set to rise to 16 percent by 2027.
Essentially, this benefit also applies to sole traders or those individuals who share in the small business income from a trust or partnership. This benefit is very important for small business owners in the early stages of growth. The support of these small business owners will help to drive innovation and productivity across the economy.
5. Dirty debts
No entrepreneur wants to be in a situation where they can’t salvage unpaid debts, but the reality is that this sometimes happens. However, there is good news for small to medium-sized companies because they can receive a tax deduction on the number of bad debts or the debt they have to write off.
The one thing you need to keep in mind is that the debt has to be included as assessable income in the previous or current income year. We recommend that you go through your list of debtors’ months before filing your tax and if there are those who you think won’t or can’t pay, write off the debts to claim the deduction. You should also remember to keep a written record to document that the debt has been written off.