Yes, it’s that time again.  30 June is fast approaching and now is a good time to review your financial and taxation affairs to determine if any action is required prior to the end of the 2010 financial year.

1. SUPERANNUATION

Aged Based Superannuation Limits
Tax Deductions are available for superannuation contributions in 2009/2010 are subject to the following Age Based Limits

If you do exceed the contribution limits, the excess contributions will be taxed at the rate of 46.5%!.

Deductible Contributions – Important!
To ensure superannuation contributions are tax deductible in the 2010 year, whether you are a business or self employed, the contributions need to be received by your superannuation fund by June 30.

Superannuation Co-Contribution
For those employees earning $31,290 or less, the Federal Government Co-Contribution will contribute $1 for every $1 personal contributions. The maximum co-contribution ($1,000) reduces by 3.33 cents per dollar over $31,290. No co-contribution will be paid once assessable income equals $61,919 per annum.
Self-employed people are also eligible for the Government co-contribution if they are actively involved in a Business as a sole trader or partnership.  Co-contributions will not apply if an individual is simply receiving passive investment income or trust distributions.

Self-Employed Superannuation
If you are not an employee (or you receive less than 10% of your total income from employment services), you may be eligible to claim a personal tax deduction for contributions made to superannuation.

Spouse Contributions
You may be able to claim a tax rebate of up to $540 for spouse contributions to superannuation, if your spouse’s assessable income is less than $13,800.

2.  CAPITAL GAINS TAX MANAGEMENT
It is important to review any capital gains (eg. from sale of shares or property) that you may have made in the current financial year.  If you have any assets that are underperforming, you may consider selling these to create capital losses  to offset the Capital Gains, thereby reducing your tax.

3.  PREPAYMENTS
In some instances, it may be worthwhile prepaying expenses before 30 June to claim a tax deduction in the current financial year. This is of particular relevance given the recent Budget announcements regarding the intended changes in tax thresholds in the next year.
Examples of expenses which may be prepaid are:

• Interest on investment loans which have been used for assets such as shares or property).
• Income Protection premiums. Now is an ideal time to review your current insurances and if appropriate, apply for an income protection policy before 30 June.
• Work related expenses such as professional memberships and subscriptions.

4. ORGANISING YOUR POST 30 JUNE EMPLOYEE AFFAIRS
Apart from preparing your annual income tax return, a small business may also need to prepare PAYG Payment Summaries, a PAYG Payment Summary Statement and lodge a workcover certificate of rateable remuneration.

The "Non Commercial Loss" rules apply if you run a small business, that you carry on as an individual or partnership that makes a loss for a tax year.
The rules determine whether or not you can use these business losses to offset against your income from other sources, such as salary and wages, or whether you need to carry these losses forward to a future tax return to offset against profits from that same business activity.
You can only offset your business loss against your other income if your other income is less than $250,000 AND:
You meet one of the exceptions which include:
- you run a primary production (farming) business and your income from other sources is less than $40,000;

• you run a professional arts businesses and your income from other sources is less than $40,000;
• your business activity passes one of four tests:
• Profits test - you have provide a profit is 3 of the past five years);
• Assessable income test - you had income (e.g. sales) from the business activity of at least 20,000;
• Other assets test  - you use assets worth at least 100,000 in the business; or
• Real property test - you use real estate worth at least 500,000 in the business

If you run a small business with turnover (sales) of less than $75,000, you may be eligible for the entrepreneurs’ tax offset.  This tax offset is equal to 25% of the income tax payable that would otherwise be payable on your business income.

If your turnover is less than $50,000, you will receive the full 25% tax offset, whilst if your turnover is more than $50,000, the offset is phased out so that it stops once your turnover reaches $75,000.

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