Year End Business Tax Planning Strategies Adopted by Tax Agents

As a general rule, a business can claim deductions for the expenses incurred in the process of generating assessable income. Many of these deductions are obvious, such as rent, material, supplies and so on, but, there may be some expenses that could be assessed at the end of the income year to further reduce your business tax liability for the year. A business may consider the following strategies most commonly advised by tax agents:

Pay Your Expenses in Advance

If any business has taken a loan and any interest has accrued on this loan, then this is potentially deductible, assuming the Business Accounts for tax on the accrual basis. In a similar manner, a tax agent negotiates with the finance provider to make upfront interests and repayments.

Review Your Balance Sheets

Another fact of business is that some amounts owed are not likely to ever be paid. End of year planning is the best time of year to re-consider these amounts, and decide if there are any legitimate bad debts, and therefore is written off and is moved into a tax deduction column. At the end of the year, a business pays back through outstanding invoices to find out the potential bad debt candidates. However, the tax agents have more rules regarding the bad debt deductions.

Shuffle the Capital Gains

Capital losses are the offset against, and therefore reduce, taxable capital gains that a business embarks on selling other assets. So, if some of the business assets realize a capital loss, then, try to crystallize these losses at the end of the year. However, if the sale produces a capital gain, delay crystallizing this gain until the next income years, so that a business can have a full financial year to put in place the options, to offset that gain with the capital losses. It may be worthy for every business to sell an under-performing asset and realize a loss, as this suits the business capital gains tax circumstances. Tax agents have stated that ‘Capital Gain Tax’ is an event that will help in the business planning if it sells an asset where settlement and payment take place in the current fiscal year. Stock Valued Vary Across the Financial Year Taking into account the changed value of your trading stock over an income year can affect the resulting business taxable income. But, as the cost, market selling, or replacement value has arrived, its end result allows the business to bring forward the deductions or alternatively increase the taxable income if the business has sufficient deductions in the preceding year. Tax Agents in Burwood keep a record that each item of trading stock can be valued differently for the tax purposes.

Appreciate Depreciation

Getting a tax deduction for the wear and tear and loss of value on business assets are used to derive assessable income as a stalwart of the business tax regime. So, a tax agent reviews the business schedule of depreciation which is always wise. A number of opportunities may be discovered, including the ability to write-off and scrap a number of redundant assets, or allocating assets to a low-value pool. This is important for current and the next tax year, as the $20,000 instant asset write-off has been extended to 30 June 2018.

Benefit from Staff Bonuses

Tax Agents has suggested that businesses that account for tax on accrual basis must claim a tax deduction for an expense in the year in which the business has devoted to liability. If the business has made any commitment to the employees for the end-year bonuses, the accrued expenses can be claimed as a tax deduction; even though, it is physically paid in the next financial year. For a business to claim a deduction for an employee bonus without physically paying the money, it must commit to the payment of a specific amount before the end of the financial year. Hence, to know more about tax planning strategies adopted by Tax agents in Burwood, you can visit Opulent Accountants website. You can contact us for more insights!

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