We are heading towards the end of another financial year and many clients are asking how they can reduce this year’s tax bill and if there is anything they should do before 30 June. 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 2024 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 may also be carried forward and be added to this year’s contributions. If this interests you, please contact us to ensure that you are eligible.
- Superannuation for Contractors – have you reviewed your arrangements with your contractors and considered whether superannuation needs to be paid? The definition of a contractor for super purposes is always changing and should be reassessed for each engagement regularly. Remember that super is only deductible when paid. See here for more information.
- Superannuation pensions – for those drawing a superannuation pension, you need to ensure the minimum pension is withdrawn from your super fund by 30 June 2024.
- Instant asset write-off – If you want to claim a tax deduction in full in this financial year for any work-related asset costing up to $20,000, then you must have purchased the asset and have it ready for use by 30 June 2024. (Please note that this has not yet been legislated and we will keep you updated if anything changes)
- Prepayments – if you are a small business (turnover of less than $10 million) 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.
- Stocktake – where relevant, complete a stock take on 30 June 2024.
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, 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.
$1,000 Safework Small Business Rebate
This rebate is still available for any eligible businesses yet to make use of it, noting that you can apply once every 5 years. 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.
Trust Distributions
Please remember that a trust cannot retain profits, and as such, a trust resolution is required to be prepared by 30 June to ensure beneficiaries are made entitled to the trust’s income.
Record Keeping
The ATO has announced that its 3 key focus area for 2024 tax time is work-related expenses, rental properties, and failing to include all income when lodging. Please ensure your records are in order and click here for more detail.
Purchase of any new significant assets
If possible, always get in touch before you purchase any significant assets such as property, shares, motor vehicles, and the like so that we can tax plan accordingly.
Life Changes
Please also always keep us up to date on any life changes such as marriages, separations, babies, children leaving home, studying or turning 18, career changes, new address, and retirement, as these are also events to be tax planned around.
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).
