Year-end tax planning: 30 June 2018 is a Saturday this year. By when do you need to do what?
We are in the process of finalising our 2018 Nexia Tax year-end planner to inform small to medium businesses and individuals what the most important issues are to consider when doing their year-end tax planning (keep an eye on our website as the Planner will be published there soon).
One interesting procedural matter this year is that because 30 June 2018 falls on a Saturday this year, ATO payments or lodgements due on that day or on Sunday 1 July can be made on Monday 2 July 2018 without incurring a general interest charge. if at all practically possible, all actions, payments or lodgements should be undertaken before Friday 29 June 2018.
However, we would recommend that for actions that must be undertaken by 30 June 2018 such as qualifying for a deduction for superannuation contributions, that those contributions be received by the superannuation fund well before 30 June; contributions not in the superannuation fund’s bank account by 30 June will not be eligible for a tax deduction. Trading stock must also be valued on 30 June; detailed records must be retained of the stock taking process for at least five years.
To qualify for deduction for super contribution, money must hit bank account by 29 June
From 2018, both employees and self-employed individuals can claim a tax deduction for personal superannuation contributions, provided the superannuation fund have physically received the contribution by 29 June 2018 (see tip above) and the individual has provided their superannuation fund with a notice of intention to claim (a deduction) document.
If leaving superannuation contributions to the last minute, you need to be aware of exactly how long the superannuation contribution takes to reach a superannuation fund’s bank account – for example if you are paying the superannuation contributions one day before the due date (i.e. 29 June 2018 for the 2018 income tax year, but the payment is not deposited into the superannuation fund’s bank account until 2 days later, no tax deduction will be allowed in the 2018 income tax year.
Please note that if the employer is utilising the ATO small business clearing house, the super guarantee contributions are counted as being paid on the date the clearing house accepts them (provided the fund does not reject the payments).
Also, be careful if the retail superannuation fund closes off their acceptance of contributions before 30 June.
An easy way to prevent any of these late payment issues is to simply pay superannuation contributions at the beginning of June each year, cashflow permitting.