As the end of the 2018 financial year is fast approaching, there are many things you can do to maximise your return for your 2018 Tax Return.
Accurate record keeping is essential throughout the year and will allow easier preparation and lodgement of your 2018 tax return down the track. If your record keeping seems to have fallen behind, get on top of it before the end of the financial year.
As a Business Owner
Your business may have long outstanding receivables that you have made adequate attempts to recover. If there is no chance these receivables are recoverable, they are bad debts and can be written off as bad debt expense. For a bad debt expense to be an allowable deduction, the debt must be written off in your accounts before 30 June, as the bad debt expense is only an allowable deduction in the year the bad debt was written-off.
It is good practise to regularly revise your receivables account as there may be receivables that are still recoverable. This will help maintain healthy cashflows throughout the year.
$20,000 immediate asset write-off
For small business entities with turnover of less than $10 million, an asset of $20,000 (excluding GST) can be immediately written- off in the year it is purchased. If there are assets that need to be purchased for the business that are $20,000 or less, they should be purchased before 30 June 2018 to be deductible in the 2018 Tax Return.
An example of assets that are included in this write-off include equipment and machinery used at the worksite, and office equipment including laptops and computers.
Prepayment expense deduction
An immediate tax deduction of prepayments $1000 or more are available for small business entities. The prepaid service must extend for 12 months or more and the deduction is allowable in the financial year the prepayment applies to. Some prepayments include subscriptions relating to your job, leasing of premises, and leasing of vehicles and equipment. This deduction is useful to consider for tax planning in the 2018/19 financial year.
Unincorporated small businesses
Small Business Income Tax Offset
An unincorporated small business is carrying on a small business as a sole trader or having a share of small business income from a partnership or a trust. The discount will be applied as a tax offset and will be calculated as 8% of the taxpayer’s income. The offset will be capped at $1,000 per individual.
As an Individual
There are many other work-related items which you may use daily on the worksite. Part or all the work-related expenses incurred can be tax deductable. It is important to keep all receipts and documentation for these items to ensure you can accurately claim the maximum allowable tax deduction. These items include;
Personal truck or car used for work (see; Work Related Car Expenses)
Sunglasses and protective work clothing
Tools and equipment
Laundry expenses for work uniform (see Tax Deductible Laundry and Dry Cleaning Expenses )
Mobile phone and internet used for work purposes
Some home office expenses (See Tax Deductible Home Office Expenses)
This information is not to be relied upon without speaking to your accountant, tax agent or financial adviser depending on the advice.