Anthony Bell Tells Us How To Beat The Tax Man

By Anthony Bell, Finance Expert

www.bellpartners.com

With the end of financial year upon us, there is limited time left to effectively minimise the amount of tax you will pay. Tax planning doesn’t have to be an onerous task, and can often involve some simple housekeeping!  What you do to manage your tax will depend on whether you derive your income as an employee, through a business or as an investor. For ease of reference, these tax tips are separated according to how you might earn your income.

Individuals

• Should you have any professional memberships or subscriptions related to your work, make sure they are paid up before 30 June
• If you use your car for work, have you done your 12 week log book to try and maximise your claim?
• Have you sold any investments for a capital gain, and are there any other investments that you have made unrealised losses on that you could sell before 30 June to reduce your capital gains? The Australian Tax Office is starting to identify people who have sold shares during the year, so you can’t hide capital gains on shares!
• If you have net medical expenses (costs after health fund and Medicare rebates) exceeding $2,000, you might be entitled to an additional tax offset of 20% of every dollar over the $2,000 threshold.
• Salary sacrificing into superannuation, provided you don’t need the money until you retire, can save a significant amount of tax, given superannuation is only taxed at 15%.
• If you have any loans that are used to fund investments, see if you can prepay some interest before 30 June to get the tax deduction brought forward.

Businesses

• If you have to make superannuation contributions for employees (including yourself), make sure they are PAID before 30 June so you can get the deduction for them this financial year.
• Are there any expenses for the September 2010 quarter that you could prepay before 30 June and get the deduction this year instead of next?
• If you sell to any customers on credit, and you know there are some bad debts amongst them, write them off as bad debts in your books before 30 June (why pay tax on money you won’t ever receive?)
• Are you holding any slow moving stock that you should discount and sell?
• Review your plant and equipment schedules. Are there any items that you haven’t fully depreciated but can no longer use and could fully write off?

The number of things you can do to manage your tax better is as extensive as you want it to be. It’s well worth taking the time to review your affairs with a professional advisor to best maximise your tax savings. Tax saved is money you can reinvest in your business or other aspects of your life for your own enjoyment.

But always remember to never enter into an arrangement or investment just to save tax. An investment is supposed to make you money first, so ensure that it will be a sound investment first, and any tax benefits are a bonus.