It is that time of the year again. No, not the massive stocktake sale that’s going on; even though it is pretty awesome; it is the end of financial year which means tax time is coming. I know when we hear the word ‘tax’ we tend to relate it to something boring, extensive and complicated. This is because we only focus on the part of tax where money is taken away from us. However, during this period, it is our time to claim our money back from the ATO. This should be celebrated! But ATO doesn’t make it easy for us. Here are a few tips filing your tax return and a short update for small businesses.
1. Be serious and get started
This is your money we’re talking about. It is “stolen” away from you and it is up to you to claim it back. So, get all your paperwork together, put your head down and focus. You wouldn’t have to look through the same receipt for the next 5 times and still get confused if you have seen it before. Log into the ATO website, print out the relevant forms and start filling it up. The faster you start the easier it seems to be. The mindset of putting it off for another day will only build unnecessary stress.
2. Stay organised
You’ll never be able to fully complete your tax return form in one day. Moreover, it is better not to finish it in one day. Instead, spread it apart over a few days to make the experience more enjoyable rather than something dreadful that you want to get done with immediately. Create a schedule and organise documents of proof into their separate categories. You’ll be surprised how easy things are when they are organised.
3. Defer income where possible
Deferring income is a common practice to paying less tax. Find out where money is flowing in and explore ways that you can delay that payment to the next fiscal year. Thus, this saves you money from paying less tax. That few dollars can go a long way. It’s not about how hard you save money; it’s about how smart you do it.
4. Use your car
There are requirements for a car to be considered an asset in a business. One of the requirements is that the allowable deductions come from the usage of the car for business purposes. There are many ways to calculate the allowable deductions for a car but the best one would be the log book method where it takes into account every time you use the car. This method gives the most deductions back but it takes the most effort because you have to manually record it throughout the financial year.
5. Choose what suits you best
There are two main ways to complete your tax returns. One of the ways is by yourself and the other by seeking an accountant to help. This is entirely up to you. Would you rather more work or less returns? Some people prefer having more control over their business and life rather than depending on an accountant. Whichever the decision, making up your mind fast in important because accountants will begin to be swamped by massive work soon.
6. Help for people earning <$50 000
Alternatively, you can seek for advice by tax officers for free. The Tax Help Program sets up accredited volunteers to assists people earning less than $50 000 a year with fairly straightforward tax affairs. Volunteers operate from 1 July to 31 October. There are requirements before being eligible for this service.
7. Find out all tax deductible expenses
There’s an extensive list of allowable tax deductions that is set up. Chances are that you are eligible for some of them. You’ll be able to claim $300 work-related expenses without showing documentation. However, claiming more than $300, you’ll have to provide proper documentation for everything above and included in $300. An example is our fully tax deductible SavvySME’s Business Plan. What’s better than reducing your tax payable? This link shows every claim on deductions you can get in the year ending 2012/2013.
As usual, there are changes in tax for this financial year again. In small business concessions, first of all, the entrepreneur’s tax offset is removed from 2012/2013. However, it’s still applicable for previous years. There are changes to depreciation rules where long life small business pool and the general small business pool have been consolidated and written-off with one rate. You can also immediately claim $3000 off assets as a deduction that costs less than $6500. Also, remember to increase your compulsory super guarantee rate. It’s planned to change from 9% to 12% over 7 years.
Tax is difficult to learn but easy to master. Once you’re a master of tax, you’d be surprised the amount of money that can save; especially when your business is beginning to grow and earning more. Don't forget to reduce your tax as much as possible! We're currently running a special EOFY discount of 50% off your first year's subscription. Find it now at SavvySME Business Plans.