Tax tips for franchises - 2019

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

If your business has made a profit this year, and has a healthy bank balance, you might want to explore some options to legally reduce your 2019 tax bill. This article covers some tax tips to consider.

If your business accounts show a profit …Congratulations! But with profit comes a tax obligation.

We’re not keen on the idea of spending money just to get a tax deduction. However, there are still plenty of ways to reduce your taxable income for the year.

If you would like to discuss the best options for you, make sure you contact us.

Look after your own financial position

If you’re heading for a healthy profit, end of financial year is a good time to consider paying yourself a bonus. This gives you the flexibility to use the money for any personal purpose, from stashing in your savings account to splurge on a holiday.

You could also increase your Superannuation contribution. The Super contribution limit is $25,000 from all sources. If you exceed this, the amount in excess of $25,000 is not deductible.

Give to a good cause

Do you have a favourite charity? If so, you can make a donation. To gain a tax deduction, you’ll need to get a receipt and make sure the charity is a Deductible Gift Recipient (DGR).

Pay your bills before 30th June

Do you have any business expenses that can be paid early? You might have some that can be paid before 30th June rather than waiting till the new financial year. This gives you a tax deduction for the expenses this year. Here are some to consider:

Employee Superannuation. Employee superannuation on wages paid between April and June is due to be paid in July. However, you can pay it early and get the deduction this year.  The contribution needs to be received by the employee’s super fund prior to year-end, which means you need to make the payment by around 20th June (check with your Super Clearing House).

Local Marketing. Money spent on advertising and marketing is vital to building your business and is tax deductible as well. So, if you’re planning on some local marketing in the next few months, pay for it now and get the tax deduction this year.

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

Office Supplies. These are every-day expenses most businesses incur. If it looks like you'll need more supplies soon, you may as well pay for them now and get the tax deduction this year.

Franchise Royalty and Marketing Fund. Payments of Royalty and Marketing Funds are also tax deductions. So, this is another option to consider.

Defer Income

Does your business raise invoices to clients? If you’ve had a good year, you could delay some customer invoices and issue them in July. This will reduce your taxable income this year. However, we recommend that you only use this option if your cashflow can still support your business.

Purchase business assets

Does your business need new equipment? If so, it’s worth considering whether to purchase new equipment before the end of June. Under some circumstances, this will give you an immediate tax deduction for the full purchase price.

To obtain the 100% deduction in this financial year, the asset must cost less than $30,000. It also needs to be purchased and ready for use by 30th June.

Capital Gains and Losses

If you've made a capital gain on any investments, check to see if you could crystallise a capital loss on other investments. That way, you can reduce your capital gains by offsetting the losses. 

One final thing to watch out for - the 30th June falls on a Sunday this year, so any payments need to be cleared by Friday 28th of June.

Peter Knight is the founder of Franchise Accounting & Tax. If you would like to discuss any of these tips in more detail, contact with him via email .