The-Pen-Deductions-ATO

Happy EOFY Small Businesses

Businesses with an aggregated annual turnover of $10 million are considered Small Businesses for taxation purposes, therefore we have compiled a list of areas to consider before 2018 Financial Year wraps up.

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Maximise Your Depreciation Deductions

Small businesses can claim an immediate tax deduction for most assets purchased by 30 June 2018 that cost less than $20,000. Such assets must be used by the business for an income-producing purpose and they must be installed ready for use by 30 June 2018.

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Assets costing over $20,000 will automatically be depreciated at a flat rate of 15 per cent in the first year of purchase and 30 per cent each year after.

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Lower Company Tax Rate!

That’s right, companies with an annual turnover of less than $25 million only pay 27.5% tax in 2017-18 Financial year, not 30 % as in previous years.

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Deductions for Professional Advice When Starting a Business

Expenses incurred when starting a business, such as legal or accounting fees, are deductible in the first year of business instead of being spread over 5 years, as it was previously the case.

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Company Loans to Directors

Always tread very carefully when dealing with advances, loans and drawings to directors and associated persons, such as family. To avoid any financial benefit being treated as an unfranked dividend at the end of the financial year, make sure you have the appropriate loan agreements in place, otherwise ensure all loans have been paid back by the end of the financial or declare a dividend to clear these balances.

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Deductions for Superannuation.

Superannuation is only deductible in the year in which the superannuation is paid. Even though you might have accrued super for employees, if it not paid it is not deductible. Therefore, it is important to pay your superannuation.