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This is not advice. Items herein are general comments only and do not constitute or convey advice per se. The information contained in these articles is for guidance only and should not be relied upon without obtaining professional advice having regard to your direct circumstances.


Getting prepared for your tax return

Once 30 June has passed, tax deductions and business expenditure cannot affect this year’s tax returns. Only expenditure made in the actual tax year can be taken into account. For business tax payers, information prepared for the March quarter BAS can be used to assess how the business is progressing and whether expenditure can be considered before the end of the tax year to reduce profit (or vice versa).

Generally speaking, where it is allowable, it is beneficial to defer income until after the year end, but to claim deductions in the current income year. Some points for both personal and business tax payers to consider are shown below:

Personal checklist

• Ensure all work-related expenses- such as training courses and uniforms - have been paid by 30 June, and that the receipts have been kept.

• Keep logbooks up to date. A new logbook is required every five years, or earlier if usage has changed by more than 10 per cent or if in a new job.

• Where possible, prepay interest – a tax deduction is available if interest is prepaid for less than 12 months

• People over 50 whose income from a job is less than 10 percent of their assessable income may be entitled to make deductible super contributions of up to $100,000. For those aged under 50, the maximum amount is $50,000.

• Review how much has been contributed to superannuation in recent years – up to $450,000 of undeducted contributions are allowed over a three year period (or $150,000 per year)

• Consider the benefits of Transition to Retirement allocated pensions. For those aged over 55, these benefits include the fact that earnings and capital gains are tax free in the super fund. Tax of 15 per cent is still payable on deductible contributions received from superannuation. For those under 60, some personal tax may also be payable on the pension.

• Those who put money into term deposits that mature before 30 June must pay tax on the interest received this financial year

• Capital gains are assessable in the tax year that a contract or sale is signed. If possible, defer signing or selling assets until after 30 June; and

• For those who have realised capital gains during this tax year, check whether there are any capital losses carried forward from earlier years, or any unrealised capital losses than can be realised before 30 June – but make sure this action won’t attract the ATO’s attention.

Business checklist

• Business owners who have borrowed money from the business must make minimum repayments before 30 June. If the loan does not meet ATO guidelines, the amount of the loan is assessable in full and tax payable by shareholders

• Superannuation contributions made on behalf of employees are subject to payroll tax and workcover; and

• The government recently proposed a temporary investment allowance on equipment purchased between 13 December 2008 and 30 June 2009.

Some tax legislation varies depending on the size of the business. For those whose turnover may have fallen, it is worth checking whether they are now eligible for small business tax concessions.

Small businesses (turnover less than $2 million):

Business expenses, including interest paid for the period of 12 months or less, are deductible in the year of the payment

Plant and equipment costing $1000 or less is deductible in full; anything more than $1000 is deductible at a depreciation rate of 15 per cent in the year it was purchased, and then at 30 per cent for subsequent years until it is fully depreciated; and

Review PAYG instalments. Estimate profit for the year and notify the ATO if profit is lower than previous years so that instalments can be adjusted.

Large businesses (turnover greater than $2 million):

• These businesses are not entitled to a full deduction for the prepayments in the year of payment. Instead, the deduction is spread over the period of the prepayment

• Write off any bad debts so a deduction can be claimed. GST refunds can also be claimed

• Valuation of stock has a significant impact on taxable income, so undertake a stocktake on 30 June. Ensure that stock is valued at cost (excluding GST) and that obsolete stock is valued at realisable value or is scrapped; and

• Review depreciation schedules and write off items that are no longer on hand or not working.

Stepher Toth
My Business, May, 2009


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