Tax deductions you need to know about
Make sure you speak with your accountant before tax time.
Charitable contributions must be justified by a receipt from a registered charity. Donations to sporting groups and schools are usually a marketing or advertising expense as they don’t have charitable status. If you buy a ticket in a charity auction and win a trip to the Gold Coast, that’s also unlikely to be deductible.
Any educational ventures can be claimed as a personal expense if it’s directly connected to your work such as a pastry chef completing a chocolate course or a manager completing a leadership certificate.
All vehicles have depreciation and running expenses. There are different ways to claim motor vehicle deductions for a vehicle that’s part-private and part-business use. A logbook should be used to establish the proportions. Find out which method gives you the best tax savings.
Can you bring forward any purchases planned for the next few months to get the deduction this year rather than next? If you use ‘accrual’ accounting, that means you need the invoice dated before 30 June. If you use ‘cash-based’ accounting, you must make the payment before that date.
INSTANT ASSET WRITE-OFF
The $20,000 instant asset write-off for equipment is well worth using. The whole cost is deductible this year instead of depreciating the cost over several years.
FIT-OUT AND FITTINGS
Are you claiming the maximum depreciation for fit-out and fittings? Lights, seats, benches, stoves and shelving can all be depreciated. If you’ve taken over a business or don’t have good records, it’s well worth getting a quantity surveyor to work out the value of what you have — my accountant says she’s never seen one of these surveys that hasn’t paid for itself many times in the first year! If you only paid a small amount for equipment as part of the purchase price for a business, the surveyor may establish it’s worth more than this and give you a new and possibly higher value to use for depreciation.
CHECK YOUR STOCK AND EQUIPMENT
Any out-of-date liquor? If it’s never going to be used (even for cooking), there may be a case to write down the value to zero. Be ready to justify what you’ve done, but it’s worth checking. What about old equipment in your storeroom? You can probably write off the depreciated value of that microwave, mixer or blender that no longer works. If it’s not being used, clear the decks and claim a deduction.
Do you have any bad debts? If you were careless about payment for a function and never received the money, you may be able to write off the debt and claim it as a deduction. You will have to show that you’ve done all you can to recover the money, then you can write off the full value — not just the cost of running it.
Superannuation payments must be paid before 30 June to be deductible, and ‘paid’ means the money has left your account, so allow plenty of time for it to be processed. It’s best to make super payments a week in advance. 30 June is a Saturday this year, so make sure you’re organised and have the cash available.
KEEP TRACK OF EXPENSES
Is it time to upgrade your bookkeeping system so you can track expenses more easily? The cost of doing that is a tax deduction, too.
This article originally appeared in Hospitality‘s June issue. Subscribe here.