EOFY: Review and Plan for 2015
The 2014 financial year is drawing to a close with just a couple of weeks to get your EOFY housekeeping done. As always, it's a good time of year to review your tax position and ensure that it and your tax strategies set you up well for 2015.
Getting some basics right at this time of year is important because there is little wiggle room for accounting changes for cash movements, physical or legal arrangements that impact your tax return.
The following actions need to be undertaken before 30 June 2014 and your accounts need to be updated to reflect that they were completed before that date:
- Writing off damaged or obsolete inventory
- Writing off bad debts
- Scrapping any out of date or obsolete plant and writing it off your asset register.
- Repay loans to satisfy Division 7A loan agreements
- Ensure any inter-entity management charges are finalised
- Review your deductions and
- Take advantage of any timing benefits and permanent savings.
- Make sure you've drawn down the minimum pension by 30 June
- Consider whether you are able to add into your superannuation and that you have the right superannuation strategy in place.
Planning for 2015 means making the most of the opportunity to time savings, finalise your housekeeping and plan for changes that are coming as a result of the Federal Budget (link). You should check in with your accountant if you're considering bringing forward any expenditure or deferring income, because both have the potential to hit your cashflow in the new financial year.
There are some things to consider now and get advice if you need it:
Prepay expenses - if you can
Take advantage of the opportunity to prepay some expenses but only bring forward those that you have the cash to do so. The $6500 instant asset right off is currently in limbo as it was supposed to finish on January 1st, however this hasn't yet been passed by parliament. Talk to your accountant about whether this is something you can take advantage of.
Consider deferring income by delaying invoicing, but check the terms of your contracts to ensure this works tax-wise. Also be careful of what this might do to your financial statements. While it may be beneficial to your business and cashflow, there needs to be a balance between tax savings and showing good results to maintain or improve your finance facilities.
If you are paying bonuses, look at your timing for tax purposes.
If you have bad debts and impairment within your inventory, what action should you be taking now?
Comply with Division 7A
Look at the decisions and elections required for your trust and make sure that you are complying with Division 7a rules.
Time your liabilities
Are you paying liabilities that are only deductible in the year you're paying for them?
With just a few weeks until EOFY, it' s a good time to make sure your business is in order, that your cash flow is good and that you're taking advantage of the tax breaks you're eligible for. It's also important to ensure that you set up properly for the incoming tax year and that you're not setting yourself up for cash challenges.
For more information about planning your tax, please contact us on 02 9957 4033 or via our contact form.
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Last updated June 2014. 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.