Time is running our for end of financial year tax planning

With the end of financial year just around the corner, Small Business Accounting (SBA) advises franchise businesses to start their end of year tax planning.

SBA recently published their End of Financial Year Newsletter which focuses on:

• tax planning
• last minute superannuation contributions
• reviewing capital expenditure requirements
• tax rate changes
• case studies on succession planning

Last minute Superannuation contributions
The 2012 Concessional Contribution limits - which are tax deductible - for persons under the age of 50 and over the age of 50 are $25,000 and $50,000 respectively.

From 1 July 2012, the private health insurance rebate and medicare levy surcharge will be income tested against three new income thresholds:

• Tier 1: 20% Health Insurance rebate for singles whoseincome is between $84,001 and $97,000 or coupleswhose combined income is between $168,001, and$194,000. The Medicare levy surcharge will remain at 1%for persons who fall within tier 1 and do not have privatehealth insurance.
• Tier 2: The rebate will be reduced to 10% for singesbetween $97,001 and $130,000 or couples $194,001, and$260,000, The Medicare levy surcharge will be increasedto 1.25%.
• Tier 3: The rebate will be removed for singles above$130,000 or couples above $260,000; in addition theMedicare levy will increase to 1.5% for this group oftaxpayers.

Review of capital expenditure requirements
Whether it be replacing vehicles, purchasing new machinery or equipment or even considering an office refurbishment, consider whether it is more effective to make the purchases pre 1 July 2012, or more tax effective if delayed until the next financial year.

Tax rate changes
From July 1 2012, personal tax rates are to be adjusted delivering tax cuts to low and middle income earners.

The greatest saving is for the low income earner on $18,200 that now pays 15% tax on $12,200 of that income, where from July 1 2012 the tax payable will be nil.

For more information on how these changes will affect your franchise business, contact your local SBA office today.