Leading up to 30 June the question on everyone’s mind is ‘How can I save tax?’ There are a few options for businesses to consider, though everyone’s personal circumstances are different.  

Whilst the Instant Asset Write off for 2024 has been reduced to $20,000 it is still a good idea to consider if there are any assets within your business that need replacing. The asset must be installed & ready to use prior to 30 June and the cost of the asset (plus install costs) must be below $20,000 to be able to be written off in full. 

You should review your Trade Debtors ledger and consider if any will not be recoverable and write off any Bad Debts before 30 June. 

Review your stock levels and make an adjustment for any obsolete stock that has no value – it may either be broken or no longer have any resale value. 

If you are self-employed or have made a Capital Gain, consider making a contribution to superannuation. You must ensure these are cleared with your superannuation fund before 30 June and you inform the fund that they are concessional member contributions. Beware there are caps on how much you can contribute so please seek advice before you contribute any lump sums. 

If you have employees, make the payment for the June quarter super before the 30 June, as superannuation contributions are only tax deductible on a cash basis and must be cleared with the fund before the 30 June to be eligible for the deduction in this year. 

Cash flow permitting delay invoicing your customers until the following financial year. This unfortunately does not avoid tax; it is simply a delay tactic.  

Prepay expenses such as rent and interest, the ATO allows for these to be paid up to 12 months in advance, so again cash flow permitting if you can pay your next 12 months rent prior to 30 June you will be entitled to a deduction in this financial year. 

Bring forward any necessary repairs to equipment. If you know your motor vehicle needs a service bring it forward to before 30 June to get the deduction in this financial year. 

Your business profitability & available cash funds will determine if any or all these strategies are suitable for your business. It is advisable to do a quick review of your financial reports and determine the business’ profitability.  

It is also important to be clear that any of these strategies only reduce your taxable income for the current tax year – you do not save this amount in tax but instead get a tax benefit depending on your income levels. For example if you are an individual and your income is between $45,000 & $120,000, you are falling into the 34.5% tax bracket (including the Medicare levy) which results in an ultimate saving is $345 for every $1,000 you spend; and for a small business company structure the tax saving is at 25%, saving $250 in tax per $1,000 spent.   

Therefore, considering your cash flow before implementing any of these strategies is a key priority. If you need any further assistance, please do not hesitate to contact us.