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4 last-minute tax tips for business owners to be opportunistic this EOFY

- June 24, 2020 2 MIN READ

For many SMEs, this tax time is more important than ever, particularly when it comes to consolidating unpaid bills, writes Roger Mendelson, CEO of Prushka Fast Debt Recovery

Small businesses would have experienced solid profits up to March 2020, and then April to June will have most likely resulted in a loss quarter.

It is imperative for small business owners to plan for a continued unstable environment, with the first six months of the next financial year likely to result in losses or very low profits. The adoption of cohesive, coherent, and cost-effective strategies will help improve processes and ensure small business owners are as tax-efficient and profitable as possible.

There is increasing trepidation within the sector for JobKeeper’s expected conclusion later this year. Coined the “September cliff”, many businesses may face potential collapse once the stimulus packages end.

If you’re worried about boosting cash flow or balancing your books, here are some simple steps to implement now while there’s still time.

  1. Review your debts and defer tax

Write off invoices older than four months and don’t worry if they get paid later as they can be brought into account at that time. This will allow you to avoid paying GST on invoices not recovered and in treating the amount as taxable income.

The golden rule is tax deferred is tax saved – it always pays to defer your tax obligations until the following year. Where you can, divert 2020 revenue into the next financial year and bring forward 2021 expenses into the pre-30 June period.

  1. Bring forward purchases

If possible, look to buy any assets prior to 30 June, that way you qualify for the enhanced instant asset write-off in the 2020 tax year. You’ll get an immediate deduction for eligible assets costing less than $150,000, which may be new or used.

  1. Offer discounts and write off old stock

The closing value of stock forms part of your business’ assessable income, so look at sales and offers to move stock as fast as possible. If you have stock that you can’t move, write it off as this means you’ll be entitled to a deduction.

If you have customers who are well overdue in paying you, offer them a pre-30 June discount to incentivise them. Now more than ever it’s critical to take all appropriate steps to improve your cash flow.

  1. Review your depreciation register

You’re able to claim a deduction for the decline in value of depreciating assets, so it’s important to review your depreciation register. You may not have looked at this for a while, so there are likely to be anomalies. These can be rectified and will likely increase depreciation, and therefore increase the amount to be deducted.

As there are new schemes in place due to COVID-19, SMEs should speak with their accountant or adviser to ensure they make the most of this tax time.

While the pandemic has caused disruption throughout the sector, this tax time presents an opportunity to take advantage of all measures, and to put your business in the strongest position possible as we head into the new financial year.

 

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