Media Release
Top 10 tips to reap benefits for next financial year
4 June 2009
With recent budget announcements and legislative changes, there are a number of areas in which you need to plan now to maximise your benefits in the coming financial year according to Marc Peskett of Melbourne based accounting and advisory firm MPR Group.
1. Aggregate your capital investment purchases in batches of assets that are identical, or substantially identical, and in sets of assets for the purposes of meeting the relevant new investment tax break to get over the $1,000 value threshold for small businesses and $10,000 threshold for large business.
2. Consider how the asset is financed. If the asset is acquired under a finance lease arrangement it will generally be the lessor that will be entitled to the tax break and not the business lessee. The lessor may pass on the tax break through reduced lease payments, but this will be subject to commercial negotiation and should be thoroughly investigated to see if there are savings to be achieved.
3. Review of the timing for purchase of an asset is also important to consider as for larger businesses the 30 percent tax break only applies to an investment commitment entered into after 12 December 2008 and on or before 30 June 2009, with the assets installed ready for use on or before 30 June 2010. Assets acquired after 30 June 2009 and on or before 31 December 2010 will only be eligible for the 10 percent break. Small business may be eligible for a 50 percent deduction on assets committed to between 13th December 2008 and 31 December 2009 and installed ready for use by 31 December 2010.
4. Plan for maximum benefit of the R&D Tax Concession, the Australian Government's main incentive to increase industry's research and development, with its cash rebate a critical source of cash for many small innovative companies. To be eligible to claim the tax concession, companies must put an R&D plan in place before 30 June detailing their projects for next year and how they will be funded.
5. Companies should also consider their R&D investment and planning to take advantage of the increase in the expenditure cap during 2009/10 from $1 million to $2 million. The increase is a transitional measure to extend the R&D tax concession cash rebate to a greater number of innovative companies before the proposed R&D tax credit comes into effect in 2010/11 and could significantly increase the cash rebate particularly for those companies eligible for the 175 percent premium deduction.
6. For exporters, investigation of their eligibility to receive the Export Market Development Grant (EMDG), administered by Austrade, should be conducted now as they may be entitled to a grant of up to 50 percent of eligible export promotion expenditure over the $10,000 threshold.
7. Companies are eligible to apply for an EMDG if they've had annual income of not more than $50 million during the grant year and spent at least $10,000 on eligible export promotion activities during the grant year. If you're a first time applicant, you may combine two consecutive financial years' expenses in the first EMDG claim to meet the $10,000 threshold. Companies with international subsidiaries involved in export market development activity may also be eligible, however the Australian entity would have to pay for these expenses directly and show them as expenses in their financial statements, or the international subsidiary would have to invoice the Australian entity for the expenses.
8. Business owners should also take the time to think about their own wealth position as well as that of potential concessions for their company and consider topping up their super contributions before the concessional contribution cap is halved and super co-contributions reduce from the start of the 2009/10 year.
9. Companies should conduct a general commercial assessment now rather than when you're already into the next financial year. This includes analysing your financial performance, assessing your forecasts for the coming year to see if they are still current and realistic, and reviewing cash flow needs for the coming year. If you have an upcoming bank review, start preparing your documentation now to ensure you meet performance ratios and all other areas the banks assess, and revisit your business strategy and whether it needs to be adjusted to suit the current market.
10. If you're going to need additional funds, start the process with your lender early to limit the impact of cash flow pressure on the business (banks are lending more prudently and taking longer to assess loans).
Marc is a partner of MPR Group and a Chartered Accountant with over 25 years of experience in high-level business planning, taxation consulting and general accounting.
Marc Peskett can be contacted for comment on 03 9869 5900.
