As a contractor, you’ll often find yourself busy with client work as you head towards the end of the financial year. That’s because your clients want to get their projects completed and paid for so that they can maximise their tax deductions on business expenses.
But so do you!
Make sure you take time out before 30 June to review your financial situation, ensure your records are up to date and compliant with ATO obligations and prepare yourself for the end of the financial year. If necessary, seek professional advice before you it’s too late.
This is a good time to pre-pay any expenses ahead of 30 June and slip some extra money into your superannuation account (within your contribution cap of course).
Consider any change to your financial circumstances or disposal of assets during the financial year which should be included in your account keeping as these may affect your tax. And check that you are taking advantage of all the small business concessions on offer, including small business tax concessions and simplified depreciation, which enables you to immediately deduct the business portion of most assets, costing less than $20,000 each, purchased before 30 June 2018.
Remember, the legislation may have changed since filing your last income tax return and this could impact potential for deductions and your taxation outcome – so be sure to do your homework or seek professional advice.
Don’t Become a Target
Some industries and professions, identified by the ATO as ‘high risk’ are subject to increased audit activity. Additionally, the following behaviours and characteristics will attract ATO attention:
- tax or economic performance that is not comparable to similar businesses
- low transparency of your tax affairs
- large, one-off or unusual transactions, including the transfer or shifting of wealth
- aggressive tax planning
- tax outcomes inconsistent with the intent of the tax law
- choosing not to comply or regularly taking controversial interpretations of the law, without engaging with the ATO
- lifestyle not supported by after-tax income
- accessing business assets for tax-free private use
- poor governance and risk-management systems.
At Ayers, we understand the financial and legal challenges that come with being a contractor. With over 20 years of experience, our blemish free record means we can help you to maximise your earning potential and be legally compliant. We also partner with accountants who can provide you with expert advice on tax planning. Talk to your Ayers consultant today.