Nobody likes to fill out tax forms. But just how bad is it?
Would you rather buy your colleagues lunch for a full month if you could avoid having to fill up those dreadful forms? Or maybe wipe the office windows? Or, even clean the office toilets?
Believe it or not, these are options widely considered by taxpayers in a survey by electronics retailer Dick Smith – if only they could get away so easily from the wretched task of filing one’s annual taxes.
The Dick Smith Productivity Study surveyed 503 respondents comprising of 252 office workers and 251 small business owners in Sydney, Melbourne, Brisbane, Adelaide and Perth.
Nearly a fifth (19 per cent) of the small business owners preferred cleaning toilets to the tax chore. A higher 22 per cent were prepared to wipe the office windows clean, and 15 per cent said they wouldn’t mind buying their workers lunch for a month. Finally, some 8 per cent gladly chose the unpleasant task of firing an employee over the tax duty.
Why this dread, especially among small business owners?
Confusion and complexity, say the taxmen. Of the 250 small business owners polled, over a third (34 per cent) said they find the process too confusing or preferred to leave it all to their accountant.
Taxmen being taxmen, the advice is not particularly kind. Simply get up to speed, says Greg Hirsch, Dick Smith’s office merchandise manager.
“The Dick Smith Productivity Study shows it’s clear education is important when it comes to making the most of tax time savings. Even those business owners who knew they were entitle to tax breaks were not aware of any of the essential details,” Hirsch said.
Taxation expert and author Adrian Raftery holds similar views, and urges small business employers to take the time to understand the tax breaks available to them.
“The ATO is ready to subsidise these improvements by offering an immediate tax write-off for new equipment purchases of up to $6,500. The Dick Smith research showed that one in four small business owners claimed they would be more likely to take advantage of this this rebate once they knew of its existence,” said Raftery, a principal of Mr. Taxman.
For the still wary small business owners, Raftery offers five tips that can cut the fear out of taxes:
1. Make the most of new small business entity (SBE) tax concessions. Small businesses can now immediately write off new business assets that cost less than $6,500, or $7,150 if you are registered for GST. You can buy any number of these assets such as computers, monitors, security systems and printers.
2. Minimise your tax bill by moving money into super. Small business owners can have their business contribute up to $25,000 per year into super, which is taxed at 15 per cent and claim a tax deduction.
3. Scrap obsolete stock or plant and write off those bad debts. Write off some old plant or stock or debts you can’t collect before 30 June and get a tax deduction.
4. Defer income and bring forward expenses. Defer your taxable income to next financial year by delaying receipt of cash income and deferring invoicing. An immediate deduction is also available to SBE’s for prepayment of allowable deductions such as lease payments, interest, rent, business travel, insurances and subscriptions.
5. Reclaim last year’s taxes. Under the proposed new “carry-back tax loss” legislation, companies that incur revenue losses up to $1 million this year can receive a refund for tax paid last year. This concession is not yet passed in Parliament and is only available to companies and not businesses operating as a sole trader, partnership or trust.