1. Bad debts
Bad debts are taxable sales that have been overdue for 12 months or more and have no chance of being recovered. It is important to write off bad debts before year end. It must be bad, not merely doubtful and must have been previously included as assessable income.
2. Trust distributions
Trustee distribution resolutions are needed before 30 June 2014, or individuals can expect to pay 46.5 per cent on trust profits.
3. Prepaid interest
There is potential for big tax refunds for prepaid interest for a capital protected share portfolio, with no cash required by 30 June.
To claim a deduction for self-education expenses individuals must show that the course maintained or improved a skill required for their current work activities, or that it was likely to lead to an increased assessable income from the same activity.
5. ATO benchmarking
Benchmarks have been developed to identify taxpayers who report income or expenses different to similar businesses. It allows the ATO to identify businesses that are not fulfilling their tax obligations.
6. Write off obsolete inventory
The year end stock take should involve a review of all inventory and identify any damaged or obsolete stock. Obsolete stock may be scrapped or valued below cost subject to specific guidelines. Receipts must be kept so that all deductions can be substantiated.
7. Capital expenditure vs repairs
Review all spending during the year to determine if all items are deductible or it they are capital by nature and need to be depreciated.
8. Review unpaid expenses
Business who are falling behind in their rent and other expenses that work on an accruals basis may claim the arrears amount as a tax deduction.
9. ATO compliance
Businesses should be aware of any ATO changes that have occurred throughout the year as penalties can apply for those businesses who fail to be compliant.
10. Prepay expenses
Prepaying expenses that cover a period of no more than 12 months is a good way to bring forward operating expenses before 30 June. Items that can be prepaid include rent, insurance and repairs.
11. Depreciation schedule
The depreciation schedule can add a significant tax deduction. The cost is also tax deductible. For businesses which maintain depreciation schedules, it is important to review them to ensure there are no items which are no longer on hand and could be written off.
12. Small business CGT concessions
Individuals operating a small business may be eligible for CGT concessions on the sale of business assets.