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Pre-30th June 2019 To Do List

Even if you have no money in the bank, and don’t think that you have any tax to pay, it is still worth having a chat with your accountant.  This is why:

  1. Crunch the numbers and see where you are at.   Just because there is no money in the bank – doesn’t mean that you haven’t made a profit.   You may still have tax to pay because you’ve spent the money on yourself, your house, bought some “toys” or paid off some debt – none of these amounts are tax-deductible.   We are finding that the banks have upped the ante after the Royal Commission, and are forcing everybody to pay principal+interest on their loans (which is a good thing) but the amount you pay off the principal is not a tax deduction.   So, your cash flow is down, but you don’t’ get a corresponding bang for your buck on the tax side of things.
    • If your accountant determines you don’t have any tax to pay, you can
      • look to reduce the upcoming PAYG installment that is due on 28th July 2019
      • Enquire as to whether any money is available through Centrelink/government assistance to help you
      • Do some cash flow planning and compare how you are going to industry benchmarks, and determine if there are any areas you need to address
      • Your accountant can refer you to marketing experts to help you increase your sales (or if you are a farmer, your accountant can refer you to a farm consultant to do a financial health check on your business).
  2. Write off Any Bad Debts
    • The debt must be bad…and not just “doubtful”.    It depends on the steps you’ve taken to recover the debt (which includes debt collection, legal notices, writs etc) keep records of all of that.  Note:  if you are reporting on a cash basis (so you only pay tax when the money hits the bank) there is a good chance you haven’t paid tax on it (because it hasn’t hit the bank) so you can’t claim back what you’ve never claimed.  Talk to your accountant about that.
  3. Stock – Do a rough stock valuation and get rid of anything that is old, not up to scratch, or no-good
    • If the stock valuation is more than last year, that will be part of the reason that there is no money in the bank.  Worse still, the higher the stock value; the higher your profit, which equals more tax to pay.
    • This applies to farmers too.   Do a head count now…and determine how many will be left on 30th June.
    • In both cases, get rid of anything that is old, not up to scratch, or no-good.   When I say “get rid of” I mean we can value these at $Nil if they are unsellable.  The lower the stock valuation, the less tax you pay.  You are allowed to value your stock at what it cost you or what you can sell it for – whichever is the lower.  So go for it.
  4. Defer Income
    • If your cash flow is good enough, hold off invoicing your customers until July (but only you can handle if financially…make sure you do the numbers on that first).
  5. Bring Forward Expenditure
    • Need something in July or August?  If your cash flow can handle it, do it now.   I’m talking business inputs, not vehicles, plant or equipment (see below for that).  Again, run the numbers and make sure you can handle it first.
  6. Prepayments
    • You can pre-pay some expenses in advance up to 12 months in advance.  Talk to your accountant about this before you do anything…there are rules to consider.
  7. Plant, Machinery, and Equipment
    • You can claim an immediate deduction for any item (from a phone to a truck or any other vehicle) that cost $29,999 or less (ex GST).   So, if you are looking for a 2nd hand Ute, or some computer gear, a bobcat or even a light truck…this could work for you.   Note that it has to cost BELOW $30,000 (ex GST) don’t buy something for bang-on $30K or you won’t get it.
    • Farmers – you get this PLUS you get automatic write-offs for fencing, grain storage, hay storage, and water storage/conveyancing equipment.
    • Review your depreciation schedules now to identify assets that can be written off before 30th June 2019.
  8. Superannuation
    • For Your Workers:  Pay your workers superannuation before the end of June (if you know how much it is going to be).  Most of us wait until 28th July to pay it (which is the deadline) but not many people know that – if you pay it in July – you won’t get the deduction for that payment until July either.
    • For yourself:  If your superannuation balance is less than $500,000 – and you haven’t paid the maximum $25,000 deductions for yourself over the last 3 years…you can “catch up” and make up the difference between what you have paid and the 3 x $25,000 that you “could have” paid.   You can do this as a five-year rolling balance catch up from now-on.

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