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Superannuation · Ensure that employers pay all superannuation contributions by year-end to maximise deductions and avoid potential exposure to the non-deductible superannuation surcharge. · Consider using the superannuation contribution window, created by the recent changes to the superannuation legislation, to maximise tax effective superannuation contributions in the current year. · Ensure awareness of reforms set out in the recent changes to the superannuation legislation effective from 1 July 2007. |
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Black hole expenditure · Review expenditure to ensure that any deductible ‘black hole’ expenditure is identified. · The types of expenditure to consider include: expenditure on a business plan, the establishment of business premises, research into likely markets or profitability of a business, capital investment in assets of the business, and liquidation and deregistration costs. |
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Capital Gains Tax · Some strategies to minimise CGT are: · Utilise the CGT small business and retirement concessions. · Consider the availability of rollover relief for disposals to related parties. · Match gains and losses, where possible, to avoid carrying forward a capital loss. · Defer a disposal to ensure the asset has been held for at least 12 months. This will potentially allow individuals and trusts to benefit from the 50% CGT discount. · Review the cost base of assets to ensure all expenditure available under the expanded definition is included. Such expenditure includes, for example, certain selling costs, capital costs of ownership, and expenditure to preserve, move or install assets. · Consider whether non-deductible costs may be included in an asset’s cost base including, for example, holding costs such as interest that are non-deductible. · Consider whether it is most beneficial to utilise the 50% discount, where available, or frozen indexation. · Defer a disposal to the subsequent income year where a gain is anticipated. Consider bringing forward a loss transaction if there are gains to offset. |
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Bonuses Taxpayers should ensure that where a bonus has not been paid at year-end, they are able to establish a clear binding commitment to the expense at the time. The key indicators of a definitive commitment are: · the bonus entitlement is included in the contracts of employment; and · a formula is in place which is not subject to management’s discretion. |
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Tax consolidation · Consider whether an election to form a consolidated group should be made for tax purposes. · If ACA is to be used, or if there are losses, consider whether valuations should be obtained as part of the consolidation process. · Review the potential tax treatment of losses within company groups. In particular, consider whether tax losses should be best applied within a consolidated group (subject to available fractions) or whether the group should remain unconsolidated. · If a loss group consolidates, consider the potential impact of capital injections into the group, which may reduce access to losses. |