The following is a list of some of the issues you may wish to consider: 

• In order to maximise benefits for the current year, it is usually helpful to prepare a preliminary assessment of your taxable income for the year to date, so that it can be seen whether or not there is a problem to fix.
• Review all deductible expenses and assessable income in the latest available figures (or prior years’ figures if current figures are not available) to determine the prospects for pre-payment, deferral or other action.

 This is not a comprehensive list and terms and conditions may apply to some of these strategies if used in your circumstances.

 If you would like to go through the possibilities with us please call well before 30 June so that there is time to implement any strategies that may be desirable.

TAX MINIMISATION STRATEGIES

In order to minimise liability to taxation for the current year, the general strategy options for most taxpayers are as follows:

1. Delay receiving assessable income.
2. Bring forward incurring deductible expenses or losses.
3. Pre-pay (up to 13 months) next year’s expenses.
4. Shift income to a taxpayer with a lower marginal tax rate (e.g. your super fund).
5. Negative gearing strategies (extreme caution is required).
6. Make payments that receive special tax treatment e.g. certain superannuation contributions.

Warning! The circumstances under which those principles can be applied are limited by certain conditions placed on taxpayers by the legislation e.g. not all pre-payments will be allowable as tax deductions.

THE BENEFITS

The effect of the above actions is either to permanently reduce or eliminate the amount of tax payable or to delay the need to pay the tax for at least another 12 months. In addition the flood levy will apply in 2011/2012.

In particular, you may benefit from tax minimisation strategies, if your taxable income for the year ended 30 June 2011 will be significantly higher than the year ended 30 June 2012. This could happen if:

• you have a ‘one-off’ capital gain or other irregular income amount in 2011.
• you will not be working or earning as much income next year (y/e 30/6/2012).

 A reduced taxable income can also have the effect of allowing receipt of Government benefits which are means tested e.g. family allowance, child day care fee relief etc

CONSIDER THE FOLLOWING ITEMS

1. Delay Income

• Timing of Derivation of Income
• Timing of Raising a Bill for incomplete work (Businesses)

 2. Bringing Forward Deductible Expenses or Losses

• Superannuation contributions (you may be entitled to a Government Co-Contribution if you make an undeducted contribution).
• Capital gains/losses – timing of transactions.
• Businesses should also consider:

1. Stock valuation options.
2. Writing off obsolete stock/plant.
3. Bad debt write-offs.
4. Paying the Compulsory Employee Super payment before 30 June.
5. Paying the last week/month of the year’s wages/commissions/bonuses before 30 June.
6. Bringing forward repairs and maintenance before 30 June.

  3. Prepayment of Expenses

The expense must be incurred and there must be a non-tax benefit associated with the payment. e.g.: Insurance premiums, membership of organisations, travel, advertising, and interest.

INSUFFICIENT TAXABLE INCOME

If you have insufficient taxable income this may result in:

• a loss of credit or inability to get credit.
• the loss of certain tax benefits associated with donations, retirement allowances, superannuation contributions, franking credits (companies only) and tax rebates (offsets).

 The general strategy for maximising tax savings is reversed where the taxpayer is in a position of insufficient taxable income.

OTHER YEAR END ISSUES

 In addition to the above, the following obligations in relation to the year about to end should be remembered:

If you use a car in producing your income

•  Motor Vehicle odometer readings at 30 June.
• Prepare a 13 week log book if your existing one is older than 5 years. 

 If you have started an account based pension

• Ensure that you have withdrawn the annual minimum required.  

If you are in business or earn your income through a company or a trust

•  Award Superannuation and/or Superannuation Guarantee Charge:

The deadline for employers to pay superannuation guarantee contributions for the 2010/11 financial year is the 28 July 2011.  However if you want a tax deduction in the 2010/11 year you must pay it by 30 June 2011.

Employers who fail to make sufficient contributions by 28 July will be required to pay the superannuation guarantee charge.  Compared to making actual contributions, the charge can cost employers almost double the amount, since the charge is not tax deductible and includes an additional administration and interest component.

• Loan accounts

Do you owe money to the business? Do you charge the interest on the loan that you are supposed to? Will the interest be tax deductible? Will your drawings be considered a deemed dividend? Have you paid at least the annual minimum payment required for your Div 7A loan?

• Preparation of Stock Count Working Papers.

• Preparation and reconciliation of PAYG statements.

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If you need more information, call the office on (03) 9585 7555 and ask for Noel or Amanda,

orcontact us by email.