Tax Planning for pharmacy
“A financial year almost over….and what have you done?”
I hope business has been treating you very well this year. Just like the final stages of a mountain ascent, you may need that final boost to get you to the top and reap the rewards of your hard work. That final push is tax planning.
The starting point to tax planning is to determine how much tax you are going to pay. From here we can work out some tax strategies that can be used to help minimise how much that will be paid in both the short and long term.
Here are a few simple items you can look at before 30 June 2017*:
Write Off Debts
Review your customer debtors list and check if they are all still recoverable. If you have made an effort to recover these amounts, you may be able to write off the debt.
You may not know this but you could be making donations which are not tax deductible. Only donations made to a registered deductible gift recipient (DGR) can be deducted. To check whether the charity has a DGR status, you can search for them in the ABN lookup website.
If you use your car frequently in your business/employment, it is worth keeping a logbook. Also all records of expenses related to your motor vehicle. For a 12 week continuous period, your logbook should record both personal and business kilometres. This is to assist in calculating any applicable motor vehicle expenses. Your log book will be valid for 5 years however you can start a new logbook at any time.
Timing of Creditor Invoices
If your accounts are on an accruals basis (based on invoice date). Speak to your creditors to see if they can invoice you before 30 June 2017 so you can claim the deduction and GST earlier.
Rental Property Depreciation and Capital Works Write Offs
Depending on when your rental property was built. We would recommend seeking a professional building surveyor to review and produce a capital works and depreciation schedule on your rental property. Because this will assist you in increasing the deductions you can claim on your rental property. Please note the 2017 Federal Budget announced that it wants to change depreciation claimed on plant and equipment items. They want to change it to either brand new residential properties or new assets that you have directly paid for yourself.
This expense is not deductible until it is paid. So if you pay all your employees’ June 2017 quarterly super owing to them before 30 June 2017. This can be deducted in the 2016/17 FY.
Please consult with your professional advisor with an Australian Financial Services (AFS) license to determine if additional super contributions can be made to your Super Fund that may also be deducted in your tax return. It is important you get advice here as the conditions for deductibility may not be applicable to your circumstance.
Ensure a stocktake is done at the end of the financial year. This should be the time to review your inventory. Then determine whether any stock has become damaged or obsolete and needs to be written off.
Those with a Trust entity, please ensure an effective Resolution has been prepared, signed and dated before 30 June 2017. This is to maximise your potential tax savings. Ineffective Resolutions could result in the Trustee being taxed on the highest tax margin.
Work out if you are a Small Business Entity (SBE)
The SBE aggregated turnover threshold over the 2017 FY year has increased from $2 to $10 million. This means as an SBE, you will be able to access certain SBE concessions. Furthermore to name a few perks this may include lower tax rates in companies, immediate write offs on start up costs (normally this would be written off over 5 years). Small business restructure rollover relief and the $20,000 asset immediate write off on certain assets purchased and installed before 30 June 2017. (2017 Federal Budget has proposed to extend this until June 2018. However if the legislation has not passed it will reduce to $1,000 from 1 July 2017.).
It is always a good idea to review your current business structure. This is to determine if the structure is still working in your favour for your current situation. If not, have a chat to your accountant about your concerns so you can plan ahead for future years.
If you haven’t done so yet, think about switching over to cloud accounting. This will allow you, your bookkeeper and accountant to review your accounts live. Therefore they may be and provide advice to you in a timely manner. It is also important to keep up to date with the latest software versions in order for compliant payroll requirements (especially being Super Stream compliant). Did I mention your subscription is also tax deductible?
The last items that you should think about before the year is over are budgets for the next 2017/18 FY. Like any other “New Year’s Resolution”, this is the time for you to look back on your business and set new goals for a better and successful next 12 months.
You still have until 30 June 2017 to do something about it. So be proactive and have a chat with us. We can assist you with tax planning before your business accounts are set in stone for the year.
*Disclaimer: Please consult with Peak Strategies or your tax professional first to see whether these items are applicable to your situation.