It is important to note that a deduction for the business tax break will only be available in the relevant year in which the eligible asset is first used or installed ready for use by the business entity. Therefore, the business tax break may potentially be claimed either in the 2008-2009, 2009-2010 or 2010-2012 income years.

Bad Debts

Prepayments

Prepayments for services that extend beyond year end are not deductible unless they are related to:

• Prepaid Salary
• Amounts Required To Be Paid By Court Or Law
• Expenditure Under $1,000
• Non-Business Individual Taxpayer

Timing of Income Derivation

Determine appropriate method - cash or accruals

Defer receipt of income until after 30 June 2009 (to defer payment of tax)

Bring forward receipt of income to utilise losses that may not be available in the following year because of change of business or consolidation

Timing of Expenses

Expenses are deductible if they are incurred by 30 June 2009.

• Must have existing obligation to pay by 30 June 2009
• Provisions are generally not deductible
• Some accruals and prepayments are not deductible

Trading Stock

Consider appropriate valuation method – value at the lower of a) cost b) market selling value or c) replacement value

Scrap unwanted stock by 30 June 2009

Superannuation

• Ensure superannuation contributions have been paid to the superannuation fund by 30 June 2009
• Make superannuation contributions based on concessional contribution limits ($50,000 for persons <50 years, $100,000 for persons >50 years) - remember these contributions are per employee (not per employer)
• Ensure superannuation guarantee contributions (9% of employee’s gross wage) are paid by 28 July 2009 (if not by 30 June 2009) to avoid SGC implications

Private Company Loans

Loans from a company to shareholders or associates will be a “Division 7A” deemed (unfranked) dividend unless certain steps are taken. Please contact us to assist you in ensuring these steps are appropriately addressed.

Ensure minimum repayments are made in respect of prior year loans.

Loans From Trusts

Loans from trusts may result in a Division 7A deemed dividend where:

• The trust has an unpaid distribution to a corporate beneficiary
• The trustee has given a loan to a shareholder (or their associate) of the corporate beneficiaries

Please contact us to assist in ensuring any loan arrangements are appropriately dealt with.

PAYG Payment Summaries

• PAYG Payment Summaries must be provided to employees by 14 July 2009 and lodged with the ATO by 14 August 2009.

Depreciation

• Scrap all obsolete items by 30 June 2009
• Consider delaying disposal of plant items (for profit) until after 30 June 2009
• Consider bringing forward disposal of plant items (for loss) to before 1 July 2009
• Identify items costing less than $1,000 to be depreciated in the low value pool

Personal Services Income (PSI)

Income that is received mainly as a reward for your personal efforts or skills may be required to be attributed to you and deductions may be restricted unless certain tests can be satisfied including:

a) You pass the results test:

• At least 75% of the PSI is for producing a result;
• The individual supplies the equipment or tools needed for the work; and
• The individual is liable for the cost of any rectification work required.

b) You don’t receive more than 80% or more of your PSI from one source and you pass one of the following tests:

• Unrelated clients test
• Employment test
• Business premises test

or

c) You obtain a Personal Services Business Determination

Trust Distribution

• Trustees should consider which beneficiaries they will make presently entitled to the income or capital of the trust on or before 30 June 2009.
• The trust deed should be reviewed to consider how trust income is to be determined and to which beneficiaries particular classes of income can be distributed.

Non-commercial Losses

• Consider whether deductions and losses should be quarantined under the non-commercial loss rules. These rules restrict the ability of an individual, who carries on a non-commercial business activity, to offset the loss against other income earned in that income year (unless certain tests are satisfied).

These tests include:

• There is assessable income from the business of $20,000 or more
• The business has generated profit in 3 of the past 5 years
• Real property of $500,000 or more is used in the business
• Other assets of $100,000 or more are used in the business
• Exercise of the commissioner’s discretion
• Income from artistic endeavour

Gifts/Donations

• Donate gifts to tax deductible charities on or before 30 June 2009
• Check that payment is to an ATO endorsed “deductible gift recipient”

Sale of Investments