Money
Issue No. 29 - June/July 2006
Steps to tax effective planning
by Mr Tony Martin
As we approach the financial year end, it is time to focus on tax planning issues, including the deferral of income, the acceleration of deductions and other tax effective planning initiatives. Consider the following:
Deferring income in relation to the derivation of income, note the following points:
- Most taxpayers will not be assessed on interest, dividends or rent until they receive it (unless otherwise paid or credited on their behalf). This creates an opportunity for deferral.
- Taxpayers may be able to defer recognition of income received before year end for services not yet performed.
- Derivation of income in general might be deferred where possible.
Accelerating deductions initiatives to accelerate deductions include:
- Ensure that superannuation contributions are paid by year end.
- Write off bad debts before year end.
- The outlay for deductible expenses may be bought forward.
- Consider scrapping stock and plant and equipment of nil value before year end.
- Value stock at a lower replacement price or market value where appropriate.
- Maximise prepayments subject to existing transitional rules.
- Consider the appropriateness of the low value pool for depreciating plant and equipment.
- Consider realising foreign exchange losses and deferring the realisation of gains.
- Ensu...
