EOFY Tax Savings For Small Business: Key Actions To Undertake

As the end of the financial year approaches, businesses need to complete several essential tasks to ensure financial accuracy, compliance, and optimisation of their tax position. This period is pivotal for financial health and planning. Some of the key but commonly missed tasks include:

• Managing debtor and bad debt write-offs
• Making superannuation contributions before June 30
• Fully utilise the asset write-off concession

Debtor management

After a full year of effort to achieve your sales target, if your customers are not paying your invoices, revenue becomes meaningless because your business needs that cashflow to operate.

Aside from the regular debtor management, you should review the aged debtors report. Aged debts that are not likely to be collected, should be written off as bad debt deductions before the year end. Ensure proper documentation is maintained to substantiate the write-offs, as required by the ATO.

Superannuation contributions

The June quarter superannuation guarantee is not due until 28 July. You should consider bringing the payment forward to before 30 June.

Superannuation expenses are not deductible until they are paid for tax purposes. By bringing forward the June superannuation payable by one month, the business can claim the tax deduction of the payment one year in advance. The same concept applies to the last pay run in June. If the pay run falls on the first two days of July, you may process the pay run two days in advance to bring forward the tax deduction.

If your personal taxable income is high, don’t forget to take the advantage of the concessional superannuation contributions. In the 2024 financial year, taxpayers can contribute up to $27,500 to claim as a tax deduction in their personal tax return.

Should I buy a business asset to take advantage of the Immediate Asset Write-off concession?

Each year we have client queries in relation to upgrading business equipment before year end to obtain a tax deduction. The answer to this is typically yes, if the new item provides a business benefit.

The immediate asset write-off threshold has dropped to the threshold of $20,000 for the 2024 financial year. Although it is not as much as prior years, it is still a good tool to use for tax deductions purposes.

Many people choose to buy assets because of advertised tax savings on the purchase of new equipment before year end. The tax benefits that you obtain for the purchase is limited to the marginal tax rate that you pay. (I.e. the tax benefit of a $1,000 equipment for a company is only $250.) Therefore, consider if you are upgrading the equipment just because you want to gain the tax benefit or whether it is necessary for the business.

There are a number of techniques that we can apply to minimise the business tax payable. You should contact your Bentleys advisor to discuss tax planning before year end to identify opportunities for tax savings.

Find an experienced business advisor you can trust

Get in touch with Bentleys today to find out how our expert business advisors can assist you this EOFY. We are here to help you get where you want to be.

.Access our comprehensive EOFY guide to step through the different opportunities, how they should be implemented to deliver the best outcomes for you, and to navigate the future tax cashflow consequences from adopting these strategies.

Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.