JOHN GLOVER: Hello and welcome to another Pendragon Straight Talk. This week’s question is always asked around this time of year, it’s what do I do before the end of the tax year?
It obviously depends on whether you are a company or an individual.
If you are an owner of a company, then you need to talk to your accountant quite soon, immediately I would say, and get a rough idea of how much profit you think you might be making before the end of the year, if you are making profit.
Then look at what you need to obtain over the next six months, so that you can perhaps purchase some of those this side of the tax year, so that you reduce your profit and therefore reduce your tax, unless you are looking as a business owner or a contractor to keep the profit and pay the tax on it.
One thing you look at if you are an owner or employee is your super contributions.
That is always a good area to look at because that is a good place where you can maximise a return out of taking some money from the company or salary packaging. I am not a qualified financial advisor or superannuation specialist, so please go and talk to them, but at the end of this tax year you can put up to 30000 or 35000 into your super tax-free, next year it will be a flat 25K no matter what your age is, so it’s worth talking to your advisors about that and see what you can sacrifice or take out of your profit to bolster your super before the end of the tax year.
The best thing to do as an owner is to see how your profit and loss is tracking and talk to the accountant about how to best utilise the profit now and not before the end of the year tax via your super as I mentioned earlier or purchasing items that you may need in the next sixth months such as laptops, new computers, phones, I don’t know, stuff that you may not need to buy just yet, but why not get it in now and refresh and even get some of the staff some nice new stuff for the start of the tax year.
Or you could always look at your charity, your favourite charity and make a tax-free donation.
If you are an individual then start to get your paper work in order re: your expenses that you are looking to claim, and also talk to someone there about your super as well. If you have the capacity to salary sacrifice some of your pay from not until the end of the tax year, look at that, you might just add another $500 or $1000, who knows. Plus you to could consider maybe a tax [free] donation to your favourite charity if you have some spare cash.
If you are a contractor you need to consider all of the above.
We are looking at this for our employees and contractors at the moment, and we are running through to see what further options there are around them maximising their net take home and reducing their tax they have to pay before the end of the year.
So talk to your accountant now and get the best advice to what you can do with your spare profit or salary you may have.
Thanks for listening, I look forward to talking to you next week.
See how much extra income you could potentially gain using our MAXpay service… Put in your yearly figures and the extra disposable income will be shown automatically at the end…