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  • Adrian De Vito - CPA

Tax Planning 2016 - Small Business Entities

Maximising deductions for Small Business Entity (SBE) Taxpayers

Generally if you carry on a business and have turnover less that $2 million you qualify as a SBE

Deductions can be maximised for SBE business taxpayers by accelerating expenditure and prepaying deductible business expenses.

Accelerating expenditure – SBE

All SBE taxpayers can choose to write-off depreciable assets costing less than $20,000 in the year of purchase*. Also, assets costing $20,000 or more are allocated to an SBE general pool and depreciated at 15% (which is half the full rate of 30%) in their first year.

Where appropriate, SBE business taxpayers should consider purchasing/installing these items by 30 June 2016 in order to claim the deduction.

(*) The small instant asset write-off threshold has been temporarily increased to 'less than $20,000', for assets acquired and installed ready for use between 7.30 pm (AEST) 12 May 2015 and 30 June 2017.

Prepayment strategies – SBE

SBE taxpayers making prepayments before 1 July 2016 can choose to claim a full deduction in the year of payment where they cover a period of no more than 12 months (ending before 1 July 2017). Otherwise, the prepayment rules are the same as for non-SBE taxpayers.

The kinds of expenses that may be prepaid include:

  • Rent on business premises or equipment.

  • Lease payments on business items such as cars and office equipment.

  • Interest – check with your financier to determine if it’s possible to prepay up to 12 months interest in advance.

  • Business trips.

  • Training courses that run on or after 1 July 2016.

  • Business subscriptions.

  • Cleaning.

Information Required

This is some of the information we will need you to bring to help us prepare your income tax return:

  • Stocktake details as at 30 June.

  • Debtors listing (including a list of bad debts written off) as at 30 June. Note: In order to claim a deduction, the debt must be written off on or before 30 June.

  • Creditors listing as at 30 June.

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