While the end of the financial year is a great time for undertaking your business housekeeping, a new financial year is a great opportunity to start looking at how your business can take advantage of concessions, funding and other tax planning. Many businesses simply don't realise the opportunities available to them.
A simple example is trading stock valuations. Your trading stock is an asset that is recorded on your balance sheet. In most cases it should be tax neutral to you. The cost of purchasing stock is expensed in your profit and loss account and offset by the value of the stock asset, until you sell it.
So, while the amount of stock you are carrying will impact on your cash position, because you have your funds tied up in it, there is no direct impact on your profits or taxable income until you sell that stock. However, if at June 30 some of your stock is worth less than its cost price, you have the option to value it at the lower figure and take the tax write off now, rather than wait until the stock is sold. This reduction in your stock value will produce a tax saving for you.
For tax purposes, there are a number of ways of valuing stock, which can produce different results. Most businesses choose to value trading stock at cost – but you have the option of valuing your stock at the lower of cost, market or replacement value.
There are over 400 grants – both State and Federal – that business can take advantage of, however one classic way small businesses disadvantage themselves is not taking the Government concessions available to them. The R&D concessions
and Export Market Development Grants are potentially very important for innovative businesses.
In the case of R&D concessions, if you develop new technologies or products, you might be eligible for a 45% refundable tax offset (equivalent to a 150% deduction).
The Export Market Development Grant reimburses up to 50% of eligible export promotion expenses above $10,000 provided that the total expenses are at least $20,000 for existing and budding exporters. While it takes time to manage these grants and concessions, the outcome can be very rewarding.
We can help your business capitalise on the opportunities available and make the 2013/2014 financial year a great one for you. Contact us on 9957 4033.
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Last updated July 2013. This article is provided for information purposes only and should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.
This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.