4 Point Checklist to Reducing Your Tax Liability this Financial Year

accountants Seven Hill

No one wants to spend a lot of money on paying taxes. If you listen to accounting professionals, individuals, as well as business owners, can save their money in several ways. Here are some simple strategies that can help you reduce the amount of tax payment every financial year. Let's take a glance at the checklist.

  1. Defer Income: If you can hold your invoices till 1 July, it will help you to defer your tax liability in the financial year. You should ensure that you don’t pay tax at a higher amount on deferred income.
  2. Make Early Payments: Consider preponing expenditures that are scheduled after June 30. This could be buying consumables like printing, computer supplies, office, and stationery. You can minimize your tax liability by paying for maintenance and repair of rental or business properties you own before the financial year ends.
  3. Scrap Stock: Your closing stock value directly affects your company's profit. When the stock value is higher, the tax and profit go high. Ensure that you do a full stocktake before June 30. For obsolete stock, you can write it off to claim a deduction.
  4. Claim Before Spending Money: Businesses can get an instant deduction for various expenses that are on the incurred list but not paid yet:
    1. Director’s fee: You can claim a tax deduction for the fee paid to the director. It needs to be committed to be paid by June 30 and the resolution for payment has been approved.
    2. Staff bonus: You can claim a deduction for staff commission and bonus that you owe to them but haven’t paid yet.

There can be much more on the list for your business to claim and save, for which you can hire professional Seven Hill accountants.