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THURSDAY, 15 JUNE 2023
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10 ways to cut your small business's tax bill WITH
Michelle BALTAZAR Editor-in-Chief • Money magazine With the end of the financial year fast approaching, small businesses can take steps to save on tax. Here are some last-minute tips to trim your 2022-23 bill. 1. Review all your expenses The starting point for ensuring you’re reducing the tax liability for your small business is to review expenses and ensure you have all the paperwork to claim relevant deductions. This can include everything from office supplies and travel expenses to advertising and professional fees. 2. Take a closer look at inventory This is the ideal time to review trading stock for obsolete lines that simply aren’t selling. Consider if stock that’s gathering dust should be written down or written off completely. You’re normally entitled to a tax break for obsolete inventory, as the closing value of stock on hand forms part of your venture’s assessable income.
3. Write off bad debts This may hurt a bit, but if your business uses an accruals-based accounting system, you may be able to claim a deduction for any bad debts it has incurred. You can only claim a bad debt deduction for amounts that have been included in the assessable income of the business, either in this year’s tax return or in an earlier return. 4. Take advantage of temporary full expensing This allows businesses an instant write-off (deduction) for the cost of an eligible asset rather than having to depreciate the item over its useful life. As temporary full expensing is scheduled to end on June 30 this year, it’s worth making use of this tax saving while it lasts. The catch is that the asset, such as plant and equipment or a new fleet car, must be in place and ready to use by June 30, 2023 to qualify for an instant write-off.
5. Prepay expenses Small businesses can prepay certain expenses before June 30 to claim them as a deduction in the current financial year. This can include expenses such as rent, insurance premiums, professional memberships and subscriptions. Check the rules around prepayments to be sure you meet tax office guidelines. Your accountant can help here. 6. Make super contributions Small business owners often make superannuation contributions for their staff but neglect
their own retirement savings: in fact, a 2018 study by the Association of Superannuation Funds of Australia found one in five self-employed people have no super at all. That makes it worth making a contribution to your fund. For 2022-23, the before-tax contribution cap is $27,500, but you may be able to claim unused contributions extending back to 2018-19. 7. Defer income if possible If the current financial year has seen your business earn higher than normal revenue, it may
be worth trying to defer part of your takings until next financial year by holding off invoicing customers until after July 1, 2023. This can be a useful strategy if you anticipate a quieter 12 months ahead. 8. Invest in staff training Small businesses with aggregated annual turnover below $50 million may be eligible to claim an extra 20% for the cost of staff training. The training needs to be run by an external registered provider to be eligible for the additional claim.
9. Boost your technology capabilities There may still be time to take advantage of the government's Small Business Technology Investment Boost. Introduced in the 2022-23 federal budget, it allows small businesses to claim 120% of the cost of digitising operations. This includes spending on portable payment devices, improving your cyber security systems or subscriptions to cloud-based services. Any tech hardware you buy to take advantage of the upscaled deduction must be in place by June 30, 2023. 10. Consult your adviser Tax law is complex and stiff penalties can apply for getting it wrong. A quick check with your tax accountant before June 30 can alert you to pitfalls to avoid as well as potential deductions you haven’t considered to help take the sting out of this year’s tax bill. ANTHONY O’BRIEN
Warning on dangers of using rental platforms As if life wasn’t tough enough for renters right now, according to the consumer group CHOICE more than two in five renters have been pressured to use so-called “rent tech” – third-party rental platforms – when they apply for a lease.
According to CHOICE, these platforms put tenants at risk of data breaches and often leave them with additional fees, including paying for their own background checks. In a worst-case scenario, rent tech can see renters excluded from housing.
“Automated decision-making systems are becoming an increasingly common part of rental application systems,” says CHOICE consumer data advocate Kate Bower. The Snug platform, for example, produces a “match score” for rental applicants,
using the personal information submitted by a renter to indicate their suitability for particular properties. “A sore lack of regulation in this market means these automated decision-making systems could increase the barriers and discrimination for
renters, potentially excluding some people from housing,” says Bower. CHOICE is calling for federal,
state and territory governments to protect renters by updating residential tenancies laws. NICOLA FIELD
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