Welcome to the June 2017 edition of the Spry Roughley Report.
With 10 days to go until the end of the financial year, it is worth spending a couple of minutes checking over your year end strategy and planning.
The general tax planning rule of reviewing expenditure and bringing forward deductions remains a good strategy for the 2017 financial year. Consider pre-paid interest, payment of superannuation liabilities, locking in staff bonuses, bad debt write-offs and inventory valuation adjustments as possible sources of additional deductions.
The large company tax rate for the 2017 financial year remains at 30%. Small businesses (entities that meet the small business test of aggregated turn-over of less than $10m) will have a tax rate of 27.5%.
Businesses close to the threshold or those with a turn-over between $10m and $25m, should look at delaying income and bringing forward deductions as the threshold to access the lower rate will rise to $25m in 2018.
Companies should also check the documentation of dividends paid in 2017 to ensure franking credits applied do not exceed the "corporate tax rate for imputation purposes". The corporate tax rate for imputation purposes is defined as the current year tax rate of the entity, calculated on the assumption that the entity's current aggregated turn-over (used to determine the tax rate) is the same as last year's aggregated turn-over.
If you haven't done so already, you should consider additional deductions by pre-paying interest on deductible investment loans (timing difference only) as well as talking to your financial planner about salary sacrificed superannuation contributions to make use of the higher concessional contributions caps, which expire after 30 June 2017.
If you purchased an investment property before 9 May 2017 you should also consider obtaining a quantity surveyors report to increase deductions for any plant and equipment as well as capital building works.
Now is the time to check that the contribution strategy has been actioned, ensuring that contributions are received into the fund's bank account on or before 30 June. Minimum pension drawings also need to be deducted from the fund's bank account by 30 June to ensure the pension remains tax effective.
The 2017 caps are:
- Concessional: $30,000 ($35,000 for members aged 49 or over on 1 July 2016)
- Non-concessional: $180,000 ($540,000 if accessing the whole of the bring forward option)
Members with pension balances over $1.6m need to ensure they have documented their pension revisions for 1 July 2017 to ensure compliance with the new transfer balance cap regime.
Funds with pension accounts over $1.6m need to review and document the application of the one-off tax concessions prior to 30 June on an asset-by-asset basis. The fund will also need to obtain 30 June market valuations for all assets. You should ensure that instructions to independent valuers include reference to the ATO SMSF valuation guidelines.
Ensure that distributions have been considered and resolved prior to 30 June including any streamed distributions that may require additional documentation.
Ensure minimum loan repayments have been met on all Division 7a (company to associated persons and trust) loans and beneficiary accounts.
The following sections include detailed information on
As usual, please do not hesitate to call us on (02) 9891 6100 should you wish to discuss how any of the points raised in the report specifically affect you, or click here to send us an email.
Fergus Roughley, Director
Spry Roughley Services Pty Limited
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