Our top tax tips for businesses and individuals ahead of the FY17 year-end

Businesses

  1. Drop in company tax rate: The company tax rate is currently 27.5% for companies with aggregate turover of less than $10M. From 1 July 2017 the 27.5% rate will also apply to companies with aggregate turnover of between $10M and $25M. Therefore tax deductions may be available for such companies at the 30% rate to 30 June 2017 and 27.5% thereafter. Accordingly:
    • to the extent you can ensure suppliers invoice you prior to 1 July 2017, the deduction will reduce tax at the rate of 30% in FY2017, thereby providing an additional 2.5% reduction in tax;
    • review your trade debtors listing and write off all bad debts where appropriate before 30 June 2017;
    • review inventory and assets schedules for obsolete items and items that can be scrapped; and
    • fully franked dividends declared and paid before 1 July 2017 will carry franking credits at 30%. Thereafter they would be franked at 27.5%.
  2. $20K instant asset write-off: Businesses that are small business entities (generally those with aggregated turnover of less than $10m) can claim an immediate deduction for assets acquired prior to 1 July 2017 if the cost of the asset is less than $20,000.
  3. Prepay expenses: Small business entities can prepay up to 12 months’ worth of expenses and claim the full amount in the current year.
  4. Payment of superannuation contributions: To claim a tax deduction for employee superannuation contributions in the 2017 financial year, the business needs to ensure that the payments have cleared the business bank account by 30 June 2017.

Individuals

  1. Reduction in top marginal tax rate: The top marginal tax rate for individuals will reduce to 47% from 49% from 1 July 2017. Therefore, you should consider whether:
    • any tax deductible expenditure should be brought forward to FY 2016-17;
    • it is possible to prepay expenses such as interest, whilst ensuring the prepayment period does not exceed 12 months; and
    • bonuses and dividends from private companies are paid in FY2018 where possible.
  2. Maximise concessional super contributions in FY17: The maximum annual concessional superannuation contributions that can be made will reduce from 1 July 2017 to $25,000. This is down from the current levels of $30,000 for individuals aged less than 50 and $35,000 for individuals aged 50 and over.
  3. Maximise non-concessional super contributions in FY17: The maximum annual non-concessional superannuation contributions that can be made will reduce from 1 July 2017. This is your final opportunity to contribute $180,000 per annum (or $540,000 utilising the bring-forward strategy). From 1 July 2017 the maximum reduces to $100,000 (and $300,000 using the-bring forward strategy) but if your member balance is $1.6 million or more no further non-concessional contributions can be made.
  4. Work-related car expenses: Ensure your logbook is up-to-date if you use a private motor vehicle for work-related purposes to guarantee you can claim the highest deduction available. Taxpayers should note that two previously available methods of claiming motor vehicles deductions are no longer available, specifically the 12%-of-the-cost-of-the-car method and the one-third-of-actual-expenses method.