Paying your tax bill is an obligation you cannot afford to ignore. ATO is particular about businesses who habitually ignore tax payments. One reason you should pay your tax bill in a timely manner is to avoid penalties. It might seem like a complicated subject matter, but it can actually be simpler. Doing a research will help you realise that there are ways you can reduce your tax bill.
Pre-Pay Business Expenses
Tax deduction can be obtained by pre-paying your business expenses. Make sure the expenses cover a period of no more than 12 months to get a tax deduction. The expenses you can include in this category are internet and telephone services, rent or leasing charges, insurance premiums and more.
Write Off Bad Debts
Every business wants to avoid insolvency as much as possible, but there are can circumstances that may eventually lead a business to become insolvent. If this ever happens, a tax deduction will be available if you write off a debt. If there are debts left unpaid, these are considered bad debts. The good news is, this is categorised as an allowable deduction so long as the debt is included as assessable income in a current or previous income year. You need to check your debtors list so you will know the clients that cannot make a payment. These debts must be written off by June 30 for you to claim the deduction this year. A proof that the debt has been written off will also be required so make sure you have a written record.
An executed bonus plan in place can also help reduce your tax bill. This is highly recommended if you intend to pay bonuses to your employees. If you have incurred the expense before the year-end, you can get the deduction for employee bonuses. However, if your company has not authorised or calculated the amounts of any bonuses, there will be no available tax deduction for you.
Pay Superannuation Contributions
When paying your employees’ superannuation contributions, make sure it is made within 28 days of the end of the quarter. For example, superannuation contributions for all June quarter must be paid by June 30. This practice can accelerate your tax deduction. If you have paid the contributions and cleared them in the business bank account and the employees were able to receive super fund before June 30, yoiu will be able to get a tax deduction. If there is any outstanding amount, make sure it is paid before year-end.