From Melbourne Accountant George Kontominas
Money mistakes made this month can potentially cost you plenty at tax time says George Kontominas, the Managing Partner of Dendra Accounting Group. Kontominas was nominated for two individual awards in the prestigious Australian Accounting Awards, the top awards for the Accounting Industry.
“Errors in June can create financial pain — particularly around the timing of tax-deductible payments and selling assets.” said Kontominas. A failure to tax plan will delay tax-deductible expenses. For example, with investment or work-related expenses, delaying them until July means waiting an extra year to get a slice of that money back from the taxman.
Good tax planning is also good business. Retailers in June promote tax deductions as part of their end-of-financial-year sales, which is good for people buying, particularly for business, who have a generous $20,000 capital expense limit per item for immediate tax write-offs.
“But tax deductible expenses only make sense if they are for something your business actually needs” says Kontominas.
Remember a tax deduction only gives you back your marginal tax rate, not the entire expense.
Taxpayers should be mindful of the opportunity of timing purchases for their business. May is your last chance to do strategic tax planning. It’s a good time to make strategic purchases that will set your business up to compete more effectively in the year ahead because the expense can be claimed this financial year instead of the following year.
Kontominas also has some advice for individuals. “People buying items for work or investment properties don’t have the same adfvantage as businesses.” he said “They cannot claim more than $300 instantly, their purchases have to be written off over time.”
“Another thing to watch is superannuation limits. These need to be checked during June, particularly for personal tax-deductible contributions made by business owners which must not go over contributions caps. Mistakes here have to be fixed and can be costly”. He said
Any business owner who would like specialist information on Managing tax for Manufacturers can attend a free event on June 15.