Top Tax Tips for Franchises

With 30th June nearly here it’s time to make sure you make the most of your tax deductions.

  1. Prepay expenses. If your business accounts on the ‘cash basis’, you can claim a tax deduction for payments you make. There are some specific franchise expenses which you could pay, such as royalties and marketing fund expenses. Paying these before 30th June will allow you to get a tax deduction.

  2. Local Area Marketing. The money you spend on advertising and marketing is not only vital to building your business but it’s tax deductible as well. So, if you’re planning on some local area marketing in the next few months, pay for it now and get the tax deduction.

  3. Buy some new assets. Small businesses get an immediate tax deduction for every asset they buy costing up to $20,000. This $20,000 limit applies to each individual item. (The asset needs to be purchased and ready for use by 30th June).

  4. Depreciation. While you're at it, take a few minutes to review your depreciation schedule. Write off any old plant or equipment that is no longer used in the business.

  5. Superannuation. To get the tax deduction this year, make sure your super contributions for employees are made prior to 30th June. The contribution needs to be received by their super fund prior to year end, so get onto this now.

  6. Your Own Super. While you're at it, make some contributions for your own super, above the minimum 9.5%. The contribution limit is $25,000 from all sources, so make sure you don't go over it, otherwise it's not deductible.

  7. Co Contribution. Check if you're eligible for the government co contribution, this is where the government makes a contribution to your super, up to $500.

  8. Capital gains and losses. If you've made a capital gain on any investments, check to see if you could crystalise a capital loss on any of your other investments. That way, you can reduce your capital gains by the losses, and reduce your overall tax position.

  9. Defer income. If your business needs to raise invoices to get paid, see if you can delay some invoicing to July. But be careful not to find yourself short of cash, so only use this option when you know your cashflow can still support your business.

  10. Stock take. Do a stock take and write off any that is old, or unusable.

  11. Repairs and maintenance. Are there any repairs or maintenance jobs that need doing in the near future? Get them done before 30th June, so you get the tax deduction this year.

  12. Donations. Be sure any donations you make go to an eligible Deductible Gift Recipient (DGR). You'll need a receipt, which will state that the donation is tax deductible.

  13. Stationery and office consumables. These are the every day expenses most businesses use. If it looks like you'll be needing some more supplies soon, you may as well get the tax deduction by paying for them now.

In addition to these specific tax tips, it's also a timely reminder about the importance of financial record keeping. The ATO is tougher now than ever to ensure you have receipts to support your claims, so make sure your records are in good shape.

One final thing to watch out for - the 30th June falls on a Saturday this year, so you'll have to make sure you've taken action by Friday 29th of June.

Peter Knight is the founder of Franchise Accounting & Tax.  Get in contact with him if you would like to discuss any of these tips in more detail. Send Peter an email