We are heading towards the end of another financial year and many clients are asking how they can reduce this year’s tax bill. Below are a few things for you to consider:
Year-End Tax Planning
- Compulsory Superannuation Payments – we recommend employer contributions are paid by 20 June to ensure they are received by the super fund by 30 June and therefore are deductible in this financial year.
- Voluntary Superannuation Payments – if you would like to use a personal super contribution as a tax deduction in the 2023 financial year, the payment also needs to be made by 20 June to ensure it is received by 30 June. You will need to complete this form and send it to your superannuation fund letting them know that you intend to claim a tax deduction. Remember that the maximum concessional* contributions that can be made, per person, in this financial year is $27,500. Unused concessional contributions from the last four years can also be carried forward and be added to this year’s contributions.
- Superannuation pensions – for those drawing a superannuation pension, you need to ensure the minimum pension is withdrawn from your super fund by 30 June 2023.
- Instant asset write-off – the ability for businesses to write off any work-related asset in full, regardless of cost, ends on 30 June 2023. If you want the tax deduction this year then you must have purchased the asset and have it ready for use by 30 June 2023. Please note that motor vehicles are the exception and can only be immediately expensed up to the current limit of $64,741. From 1 July 2023, the instant asset write-off limit will be reduced to $20,000.
- Prepayments – as a small business you can prepay expenses for up to 12 months in advance and claim them now. Some examples are rent, interest and insurance.
- Deferring income to next year – if you have received income in advance of work being performed in full or in part, the unearned portion of that income may be deferred to next year.
- For private companies – Division 7A Loans – A reminder for any business owners who have borrowed funds from their company and wanted to repay this loan that funds need to be received by the company by 30 June.
- Capital gains tax (CGT) – if you have sold any real estate, cryptocurrency or shares that fall under the CGT provisions during the year, note that the contract date is when the asset is considered sold for tax purposes, not the settlement date.
- Crypto Assets – remember that for tax purposes, disposing of a crypto asset is not just limited to converting to Australian currency. Trading or exchanging for other crypto assets or foreign currency and even buying goods or services may be considered a CGT event.
- Stock take – where relevant, complete a stock take as at 30 June 2023.
Other Items of Note
Structure
Is your current business structure the right one for you? Is it time to look at a partnership, company or trust? If so, then having this set up and ready to go by 1 July will assist in making it a smooth transition. Please talk to us if this is a consideration for you.
Late lodgment amnesty
This amnesty applies to overdue income tax returns or business activity statements that were originally due between 1 December 2019 and 28 February 2022. If these returns are lodged between 1 June – 31 December 2023, any late lodgment penalties will be automatically remitted.
$1,000 Safework Small Business Rebate
This rebate is still available for any eligible businesses yet to make use of it. There are not many eligible items that are relevant to our client base, but a sit stand desk is one item that we know of. If you have purchased one in the last 12 months, or will be purchasing one, please apply for your rebate here.
Record Keeping
The ATO have announced that its 3 key focus area for 2023 tax time is rental property deductions, working from home deductions and capital gains tax. Please ensure your records are in order and click on the links above for more detail.
The above are general comments only. If you would like to book in for a tax planning discussion before year end or have any other questions, please don’t hesitate to contact us.
*Concessional contributions are those made before tax. This means that additional voluntary tax contributions are a tax deduction to you and will be taxed at just 15% in your super fund (unless your taxable income exceeds $250K).
