10 tax saving tips

Source: www.hospitalitymagazine.com.au, written by Ken Burgin

Like to pay less tax? My accountant Amanda Fisher from Connected Accountants in Sydney updated me recently on how business operators can catch extra tax savings before the end of the financial year.

With just over a month to go until the end of the financial year, you might find the following tips helpful:

  1. Bring forward any purchases planned for the next few months – get the deduction this year rather than next. If you use ‘accrual’ accounting, that means you need the invoice dated before 30 June. If you use ‘cash based’ accounting, you must make the payment before that date.
  2. Business vehicles all have depreciation and running expenses. Logbooks are essential and should be updated every three years. There are three ways to claim motor vehicle deductions for a vehicle that’s part private and part business use: a logbook to establish the proportions, or 12 percent of the value of the vehicle (maximum value $57,466), or a flat one-third of the running costs. Find out which method gives you the best tax savings.
  3. What about the old equipment in your storeroom? You can write off the depreciated value of that microwave, mixer or blender that no longer works. If it’s not being used, clear the decks and claim a deduction.
  4. Are you claiming the maximum depreciation for fitout and fittings? Lights, seats, benches, stoves and shelving can all be depreciated. If you’ve taken over a business or don’t have good records, Amanda says it’s well worth getting a quantity surveyor to work out the value of what you have – she’s never seen one of these surveys that hasn’t paid for itself multiple times in the first year. If you only paid a small amount for equipment as part of the purchase price for a business, the surveyor may establish that it’s worth more than this and give you a new and possibly higher value to use for depreciation.
  5. Any out-of-date liquor? If it’s never going to be used (even for cooking), there may be a case to write down the value to zero. Be ready to justify what you’ve done but it’s well worth checking.
  6. What about bad debts? If you were careless about payment for a function and never got the money, you may be able to write off the debt and claim it as a deduction. You will have to show that you’ve done all you can to recover the money, then you can write off the full value, not just the cost of running it.
  7. Making donations? Remember that charitable donations must be justified by a receipt from a registered charity. Donations to sporting groups and other good causes are usually a marketing or advertising expense, as they don’t have charitable status. And if you buy a ticket in a charity auction and win the trip to Bali, nice try, but that’s unlikely to be deductible.
  8. Self education can be claimed as a personal expense if it’s directly connected to your work eg a pastry chef does a chocolate course, or a manager does a leadership certificate. Unfortunately the people who do my monthly ‘Starting a Cafe’ workshops can’t claim the cost, because it’s not related to the work they do at the time they attend.
  9. Superannuation is a large and frequent expense, due 28 days after the end of each payment period. Normally the payment for your June quarter is not due until July, but if it’s paid before 30 June, the expense will come into the current year. You’ll have to decide how this fits into your cashflow.
  10. 30 June is a Monday this year – get yourself well organised and talk to the accountant now. Is it time to upgrade your bookkeeping system so you can track expenses more easily? The cost of doing that is a tax-deduction too.