As this financial year draws to a close, are you wondering if you made the most of your tax planning opportunities over the last 12 months? Now is the perfect time to start planning for the next financial year. We've compiled a list of our top tips for small businesses and individuals.

Be prepared for ATO reviews and audits

The Commissioner of Taxation previously indicated the ATO would shift its focus to small businesses and individual taxpayers. Then, under the 2018 Federal Budget the ATO was given $130.8 million to increase compliance activities targeting individual taxpayers and their tax agents.

So, the message to small business owners and individuals is clear – make sure you are obeying with the tax laws ... the ATO will be watching!

Areas the ATO is likely to target include:

  • individuals over-claiming deductions on items such as work-related expenses and rental losses;
  • undeclared business income;
  • business expenses being mingled with private expenses;
  • failure to comply with superannuation guarantee obligations.

$20,000 instant asset write-off

Does your small business need new equipment? You may be entitled to an immediate 100% deduction.

The $20,000 instant asset write-off for small business expires on 30 June 2019. Under this measure, small business taxpayers who buy an eligible asset costing less than $20,000 can immediately deduct the business portion of that asset in their tax return if:

  • they have a turnover less than $10 million;
  • the asset (whether new or second hand) is first used or installed ready for use in the financial year in which the deduction is claimed.

Donating to charity

There are many worthy charities in Australia who rely on donations to fund their day to day activities. If you (individual or small business) are considering donating to a charity don't leave it until the last minute.

Donations of more than $2 to charities which are deductible gift recipients (DGR) are tax deductible provided you have a tax invoice from the charity. To work out if a charity is a DGR, you can check the Australian Business Register. While you're at it, why not consider supporting the charities assisted by HHG Giving Back?

Private Health Insurance

If you don't have private health insurance (for hospital cover) you have to pay the Medicare Levy Surcharge (between 1% and 1.5% depending on your income) once your income exceeds $90,000 for singles and $180,000 for families.

If you earn more (or are likely to earn more) than the income threshold in the coming financial year, it may be worthwhile for you to talk to the health insurance funds and decide whether it makes sense for you to take out hospital cover rather than pay the Medicare Levy Surcharge.

Salary sacrifice

A salary sacrifice arrangement is an arrangement between an employer and an employee, where the employee agrees to forgo part of their future salary or wages in return for the employer providing them with benefits of a similar value.

There are many types of benefits that can be salary sacrificed including superannuation contributions. The advantage to the employee is that the benefit is obtained from "pre-tax" income.

Both the employer and employee ought to obtain advice before entering into a salary sacrifice arrangement as there are tax and other implications for both parties.

Get advice early

Regardless of whether you are an individual or small business the key to any tax planning is to get advice early. Get advice on:

  • business and investment structures – not all business structures give you the same access to tax concessions, exemptions or planning options;
  • new transactions whether they be purchases or sales – the way you structure a purchase or sale may impact your ability to access tax, CGT, GST and transfer duty exemptions and concessions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.