Tax Deduction

Planning for 2017

Whether you're a small business owner or an employee, now is the time to be thinking about your tax position and start planning for 2017.

Small Business Entity (SBE) – Last chance immediate deduction

If you are an SBE and are considering purchasing a capital item (e.g. plant & equipment) up to the value of $20,000 (net of GST) ensure you have the item on hand and ready for use before 30 June 2017.  After this date the immediate deduction for capital items will revert back to just $1,000.

Vehicle Log Books

To maximise your motor vehicle claims ensure you keep a vehicle log book for a minimum 12 week period.  This will ensure we can utilise the best method to claim a motor car deduction.  Each entry in the log book should record the following:

• The day the journey began and the day it ended
• The car’s odometer readings at the start and end of the journey
• How many kilometres the car travelled on the journey
• Why the journey was made

Salary Sacrificing Arrangements

A very effective tax planning technique for any employee with rental properties should consider salary sacrificing their share of the rental property expenses.  By having an effective salary sacrifice arrangement in place the employee can package the GST-exclusive cost and save on the GST.  The employer will not be subject to FBT as its taxable value will be reduced to nil under the ‘otherwise deductible’ rule.

In addition, the employee can ‘double dip’ by claiming an outright deduction for the GST-inclusive cost of any asset purchased  that meets the immediate write off for non-business assets costing less then $300 [section 40-80(2) ITAA 1997].

A salary sacrifice arrangement is between an employer and an employee, where the employee agrees to forgo part of their future entitlement to salary or wages in return for the employer providing them with benefits of a similar value.  It is very important that an effective salary sacrifice agreement is in place, else the tax benefits will be denied.

If you would like to discuss how any of these tips can help you please contact our office.

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