Damien Bones, Wayne Shainfeld, April 2016 -  

The end of the financial year is almost upon us again, and it’s time to turn your thoughts to getting tax affairs in order to optimise your tax position. Dental management specialists Prime Practice and accounting and tax experts, Deloitte, have shared some of their top tips to help dental practitioners maximise their tax savings and streamline the end-of-year tax compliance process.

Tip #1: Move to a cloud-based fully-integrated financial management solution

Most dental practice owners will be familiar with the drawn-out process of waiting until after year-end to generate their financial reports, and months of work in preparing and submitting tax returns – both for the business and personally. Now there is a way to streamline that process so you could prepare your tax returns right away and understand your tax position just weeks after year end.

Dental management specialists Prime Practice have collaborated with accounting firm, Deloitte, to deliver such a solution, known as Prime Practice Connect. Tailored for the dental industry, the solution integrates with cloud accounting software, such as Xero, MYOB and Intuit, to provide a clear view of the business metrics in real-time, via an online, intuitive dashboard. The end result is set to simplify and improve the daily management of dental practices, and make end-of-year tax compliance a breeze.

Tip #2: Make the most of the $20,000 instant asset write-off

The big ticket item in last year’s federal budget for SMEs was undoubtedly the short-term accelerated depreciation write-off up to $20,000 (up from the earlier $1000 threshold) for assets acquired by small businesses with an aggregate annual turnover of less than $2 million.

The accelerated depreciation measure applies to all asset purchases up to the value of $20,000 for businesses that have annual revenue of up to $2 million. The asset can be new or second-hand, and the accelerated write off applies to assets acquired on or after 12 May 2015, and first used or installed ready for use on or before 30 June 2017. This allows businesses to immediately write-off the full value of the asset and can be used multiple times, effectively increasing the allowable deductions of a business.

If you are moving to a cloud-based financial management solution, now may be a good time to acquire new laptops and portable devices under this initiative. It’s important to remember that this is a temporary measure for three years, so you may be able to make the most of it this year to minimise your tax. From 1 July 2017, the threshold will return to $1,000.

Tip #3: Acquire multiple devices for employees and enjoy FBT relief

As an added sweetener, from 1 April 2016, small businesses will not incur a fringe benefits tax (FBT) liability if they provide their employees multiple work-related portable electronic devices that have similar functions. These include devices that are primarily used for work, such as laptops, tablets, calculators, GPS navigation receivers and mobile phones. This benefit may be in addition to or part of the employee’s salary or wages package. Perfect if you are planning to provide key employees with devices to access your new cloud-based financial management solution!

Previously, an FBT exemption could apply to more than one portable electronic device used primarily for work purposes, but only where the devices perform substantially different functions. Removing the restriction that a tax exemption is only provided for one work-related portable electronic device of each type will remove confusion where there is a function overlap between different products (such as between a tablet and a laptop).

Tip #4: Ensure your employees’ super is in order and consider your own super strategy too

Dental practice owners should be aware of their obligations under the federal government’s SuperStream program, which requires employee super contributions to be made electronically in a standard data set. Making the move to a cloud-based fully-integrated financial management solution such as Prime Practice Connect (see Top Tip 1 above) will enable you to meet these obligations automatically.

Small businesses with 20 or fewer employees have until 30 June 2016, to become SuperStream compliant, but SuperStream national program manager Phillip Hind cautions you should not leave it until June to get organised. “Please don’t leave it to June 2016 because there will be a significant rush, resources will be strained and it might be problematic in that ‘pressure cooker’ environment,” Hind said. “Get it done and out of the way.”

Tip #5: Take advantage of restructuring benefits without tax penalty

On 4 February 2016, the Government introduced into Parliament the Tax Laws Amendment (Small Business Restructure Roll-over) Bill 2016 to enable Australian small businesses, including dental practices, to change their legal structure without attracting a capital gains tax (CGT) liability at that time.

The changes are expected to apply to transfers occurring on or after 1 July 2016, and will:

• Provide greater flexibility for small business owners to change the legal structure of their business by allowing them to defer gains or losses that would otherwise be realised when business assets are transferred from one entity to another.
• Provide small businesses with a new roll-over for gains and losses arising from the transfer of active CGT assets, trading stock, revenue assets and/or depreciating assets between entities as part of a genuine restructure of an ongoing business.
• Apply to transfers that do not result in a change in the ultimate economic ownership of the assets.
• Be in addition to roll-overs currently available where an individual, trustee, or partner in a partnership transfers assets to, or creates assets in, a company in the course of incorporating their business.
• Extend the relief to include transfer of trading stock, revenue assets, and depreciating assets.

Get on the front foot with tax planning this year, and consult a professional advisor to maximise your potential tax savings and consider the move to a cloud-based financial management solution to streamline the end-of-year tax compliance process.

About the authors

Wayne Shainfeld has deep industry experience in the dental industry, with over 20 years’ corporate experience leading global multinationals. Wayne has a proven track record of identifying, conceptualising and delivering products to market, and plays a key strategic role in growing the dental industry in the Australasian region.

Damien Bones is a Partner at Deloitte in their Business Advisory sector. Damien has over 15 years’ experience, and specialises in providing business, accounting and taxation advice to small to medium enterprise clients and advising high net wealth individuals. He has a passion for cloud accounting technology, and where that can take his clients.