Where are the bigger tax planning opportunities?

June 2013

Beyond your EOFY housekeeping, there may be larger tax planning opportunities that should be considered, such as being eligible to claim R&D tax concessions   taking advantage of the loss carry back rules to get a refund of company tax paid in the last year, and export market development grant eligibility.

Let's look at each one to see how your business can benefit.

Research & Development

If you're a small business conducting research and development, now's the time to check whether you're able to claim a 45% refundable offset under the R&D Tax Incentive program.

Recent changes announced by the Government have focused on re-prioritising support for small and medium sized businesses, as well as introducing the ability for small businesses to opt-in to receive quarterly credits. The move to quarterly credits is intended to help SMEs to access benefits of the offset sooner in an income year, rather than waiting for their tax returns to be assessed.

Businesses with aggregate turn over of less than $20 million can claim a 45% refundable tax offset, provided they meet eligibility criteria. Businesses with aggregate turnover of more than $20 million can access a 40% non-refundable offset. Quarterly credits will apply from 1 January 2014.

One of the key considerations small business owners should understand about the R&D scheme is how to maximise your offset. Working with your accountant and planning your R&D expenditure can yield a better outcome. Planning your expenditure also ensures that your expenditure is properly documented.

Unsure if you're eligible or planning R&D in the coming financial year and need to apply?  Contact Bates Cosgrave on 02 9957 4033 to find out how to make the most of the R&D Tax Incentive.

Loss Carry-back
Australia's small business owners have been on something of a bumpy ride since the Global Financial Crisis and as the resources boom starts to slow down, the real impact on SMEs is becoming clearer.

Many businesses have incurred losses over the past financial year, however new legislation means that many will be able to take advantage of new loss carry-back rules. So what does this mean for SMEs?

Generally speaking, a tax loss refers to the amount by which deductions exceed assessable income for the tax year. Under the new rules, businesses can carry back losses to previous years as an alternative to carrying them forward.

From 2013/14 and later income years, the loss carry-back refund can be claimed against tax liabilities of either of the two income years preceding the current income year. The new legislation also includes a transitional measure for the 2012/13 income year only, when a loss carry-back refund can be claimed against the 2011/12 income year. Loss carry-back will not be available to trusts, partnerships or sole traders, and some losses such as excess franking offsets, are not eligible to be carried back.

The loss carry-back is optional and business owners can choose which tax loss to carry back and how much to carry back. It is important, however to ensure that your documentation for expenditure is good shape and that you work out the best approach for your business.

We strongly recommend speaking to your accountant about how to best utilise loss carry-back to ensure you're applying the rules appropriately for your business. Contact us on 02 9957 4033 for more information.

Export market development grant eligibility
If you're a small business looking at or currently undertaking export activities, it is worth investigating whether your business is eligible for the Export Markets Development Grant.

The EMDG scheme is managed by Austrade and offers SMEs financial assistance to develop export markets for their products, services,  intellectual property and know-how outside Australia. The scheme:
  • reimburses eligible export promotion expenses above $10,000 provided that the total expenses are at least $20,000
  • allows up to seven grants to each eligible applicant
First-time applicants must have spent $20,000 over two years on export marketing expenses, however the Government has introduced a range of changes to the scheme, which is currently before Parliament.

Applications will open on 1 July and close on 2 December 2013, and can only be made via the e-lodge system, which requires users to obtain an AUSKey.

If you think that your business could be eligible, please contact us on 02 9957 4033 to discuss your export activities and obtain guidance on how to apply.

For more detailed information about the EMDG, visit Austrade's publications page to download brochures, industry-specific information and eligibility criteria.

$6500 instant asset write-off for SMEs with less than $2m revenue
Many start up companies are in the dark about the federal government's $6500 instant asset right-off, which increased from $1000 in the 2012 Federal Budget. However it's not just start-ups that can take advantage of this scheme.

Small businesses with an aggregated turnover of less than $2 million can immediately write off assets valued at less than $6500 a the full amount. This may include items such as laptops, desks, printers and other smaller assets.

This helps reduce the tax company profits and means that SMEs can write off the asset rather than depreciate it. This is an example of where timing your tax savings may prove beneficial - deferring the collection of income may in fact be beneficial if turnover is greater than the $2 million threshold.

Get your timing right
These opportunities are time sensitive and time limited.  The things you do between now and June 30 could make a significant difference in the benefit obtained. Please contact us on 02 9957 4033 for more information.

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Last updated June 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.

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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.

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