Defer Income

Salaries, fees, bonuses, interest, dividends and rent are assessed when received. If possible, defer receipts of such income until after 30 June.

Maximise Deductions

Bring forward purchases of items and services to before 30 June. These could include stationery and consumables not included in stock on hand; subscriptions and maintenance contracts; travel tickets; repair and maintenance costs and donations to charities. Small businesses (<$1 million turnover until 30/06/07, then <$2 million) in the Simplified Tax System and taxpayers incurring non-business expenditure may prepay expenses such as rent, interest, insurance, advertising and leases and obtain a full deduction. Ensure that there is a commercial benefit and that the prepayment is for a period not more than 12 months.

Asset Register

Review your asset register and depreciation schedule to identify any obsolete or unserviceable assets for disposal or scrapping prior to 30 June.

Stock Take

Damaged or obsolete stock should either be separately identified and valued appropriately, or scrapped. Ensure that you maintain your physical stock count at year-end.

Medical

Medical and hospital expenses should be paid prior to 30 June if already over or approaching the $1,500 rebate level.

Bad Debts

To obtain a deduction in the current year bad debts must be written off prior to 1 July.

Superannuation

The maximum deductible contributions to a complying superannuation fund for 2005/2006 is $100,587. To obtain a deduction for contributions in the current year, superannuation must be paid before 1 July. Maximum deductible contributions are based on age:

• Under 35: $14,603

• 35 to 49: $40,560

• 50 & over: $100,587

Superannuation Guarantee Charge was 9% as of 1 July, 2002.

Investments

There are various investment products and tax shelters which offer not only commercial benefits but also significant tax savings and include primary production operations, the film industry, leveraged equities, etc. These have varying degrees of risk, return and tax efficiency and should be carefully considered prior to commencement. If purchasing shares, consider whether they pay fully franked as opposed to unfranked dividends. While investment decisions should not be purely tax driven, the income tax liability should be considered as part of the overall decision.

Minimise Net Capital Gains

If capital gains were realized during the year it may be prudent to offset these by selling, before 1 July, assets that will realize a capital loss. Please contact our office if you need tax planning advice.

2005/2006 Cents per Kilometre Car Rates

• Up to 1600cc: 55c

• 1601 to 2600cc: 66c

• Above 2600cc: 67c

(article from our 2005 newsletter, but updated for 2006)