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Last minute tax planning tips for your Real Estate
business!30 June is fast approaching! Get the most of what's left of the financial year by following our
last minute tax planning tips!
1. Extra deduction under Investment AllowanceThe new investment allowance provides an additional deduction of between 30% and 50% for
the year ended 30 June 2009 depending on whether or not you are considered a small business
entity. The most common application of this allowance in a Real Estate business is with the
purchase of a new car!To get the benefit of the deduction in the 2008/09 financial year, the asset must be used in
your business or at least installed ready for use before 30 June 2009.If you do not qualify as a small business entity (turnover of your business and related entities
of less than $2m) you must be "committed" to the investment before 30 June 2009 to qualify for
the 30% allowance. Small businesses have until 31 December 2009 to commit to the investment
and qualify for the 50% allowance. Click here2. Take advantage of higher deductible superannuation contributions
From 1 July 2009 the maximum deductible superannuation contributions are reduced by half.
Of course cash is tight at present for most businesses but, if you are entitled to make deductible
superannuation contributions you may wish to make the most of the higher contribution
thresholds before 30 June 2009. Click hereThe fund must receive the money by 30 June 2009 in order for the contribution to be deductible.
Please talk to your accountant before making any contributions to ensure you meet the
deduction requirements.3. Extra deductions by prepaying expenses
Small business entities (turnover of your business and related parties of less than $2m) or
passive investors (rental property or shares) may be eligible to claim an immediate deduction on
certain prepaid expenses.
click hereA small business can prepay services like insurance, or an investor could prepay interest and
also have the benefit of locking in their interest at a fixed rate for one year. To be eligible, the service
period covered by the prepayment must be for a period of 12 months or less.Depending on your structure, you may also be able to prepay interest on investment properties
outside of your business structure.
4. Clear underperforming or loss assetsHave you made a capital gain during the year? If so, you may wish to sell underperforming capital
gains tax assets to offset capital losses against realised capital gains.Review your depreciation schedule and scrap any old assets. Any loss on the scrapping of these
assets can be used to reduce other income.
5. Defer income or bring forward expenditureThe oldest tax planning strategies in the book involve pushing income into the next financial year
and bringing forward expenses into June. Consider delaying the invoicing of income into the
new financial year or, if for example you are planning on doing some repairs to equipment,
you could consider completing the repairs in June rather than July.While both of these strategies are tax effective, keep in mind the effect this might have on your
cashflow and future tax years.
6. Commission and Super PaymentsTo be entitled to a deduction for your employees guaranteed super contributions the amount
must be paid before 30 June 2009!If you have commissions payable to staff as at 30 June that would not normally be paid until the
1st weeks of July, why not undertake a special pay run on 30 June to bring those expenses into
the 2008/09 financial year.7. Limit your maximum tax rate to 30%
If you operate in a trust structure, you can distribute income to a company and benefit from the
30% company tax rate. Of course you need to consider the benefits of this strategy in accordance
with your personal situation but to enable you to even consider undertaking this strategy you need
to have a company setup before 30 June 2009.
Feel free to call me to discuss your tax planning options.Regards
JOHN KNIGHT
Bean Thinking About Something Else?
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