2018 Year End Planning Strategies for SBE (Small Business Enterprise) Taxpayers

As the 30 June 2018 approaches, it is important to consider what additional expenses you may be entitled to claim, and ensure that they are incurred before year end.

These are highlights of some of the available deductions – please contact our office if you require further information or prior to acting on this information.

Super Contributions

Super contributions are only available in the year that they are paid. If you pay your June 2018 contributions before the 30 June (and allow sufficient time for them to be processed through the clearing house), then you can claim the deduction in the current year, otherwise the deduction is only available in the following tax year.

Start Up Costs

An SBE taxpayer may be entitled to claim an immediate deduction with respect to start-up costs incurred in relation to a proposed business.

Some of the common start-up costs available include:

• Obtaining advice or services form an accountant or lawyer relating to the proposed structure or operation of the business
• Payment to an Australian Government agency of fees, taxes or charges relating to establishing the business or its operating structure and

Small Business Asset Write Off

An SBE may claim an immediate deduction in relation to the following expenditure for depreciable assets:

• Acquiring any depreciating asset that has a GST-exclusive cost of less than $ 20 000
• Making capital improvements to an existing asset that costs less than $ 20 000 where the asset was originally eligible for an immediate write off
• Claiming the general pool balance where the closing pool balance is less than$ 20 000

The $ 20 000 threshold reduces to $ 1 000 from 1 July 2018, although there is a proposal to extend the $ 20 000 instant asset write off threshold to 30 June 2019, but this is not yet law.

Immediate Deductions for Prepaid Expenses

SBE taxpayers can claim an immediate deduction for prepaid expenses where the payment covers a period of 12 months or less that end in the next income year.

Trading Stock Valuations

Taxpayers who have stock should consider using the trading stock valuation method that produces the lowest valuation at 30 June 2018.

Business taxpayers can utilise one of the following methods to value its stock:

• Its cost
• Its market selling value or
• Its replacement value

It must be remembered that your closing stock will become the opening stock value for the following year.

SBE taxpayers can choose not to account for changes in trading stock if the movement between the opening and closing stock on hand is less than $ 5 000 (based on a reasonable estimate)