With the end of the financial year fast approaching, now is a great time to review your current position and year end tax planning strategies. This will look different for everyone, below are some actions that could be useful.
BUSINESSES
Review old debtors and write off before 30 June. Ensure there have been attempts to recover the debt.
Complete stock takes of your inventory prior to 30 June and write off any obsolete, expired or unusable stock before 30 June to reduce your stock on hand figure.
Superannuation
To claim a deduction in the 2024 financial year, ensure that your employee superannuation payments are received by the super fund or the Small Business Superannuation Clearing House (SBSCH) before 30 June 2024. Processing delays may cause them to be received after the end of the financial year. We recommend checking cut off times with the clearing house to ensure the super contributions are processed before 30 June 2024.
Division 7A Loans
Business owners who have borrowed funds from their company in previous years must ensure that the appropriate principal and interest repayments are made by 30 June 2024. There are various methods availalbe to make a repayment other than a cash payment.
Small Business Entities
A range of tax concessions are available for small businesses, including an immediate deduction for prepayments of expenses for a period of up to 12 months.
Small businesses with a turnover of less than $10m can deduct the full cost of eligible assets (less than $20k) when they are first used or installed before 30 June 2024.
Training Boost
A 20% tax deduction on eligible staff training expenses incurred between 29 March 2022 through to 30 June 2024. To claim a deduction for this, training must be provided by a registered external training provider.
Trustee Resolutions
Generally, a trustee must have considered and resolved to distribute trust income to beneficiaries prior to 30 June each year. Note, the deed may specify a different date. It is prudent to document this prior to 30 June each year, noting that distributions don’t necessarily need to be paid in cash to be effective.
INDIVIDUALS
Working from Home Expenses
Work equipment purchases of less than $300 are fully tax deductible.
There are two methods to calculate your work from home expenses. The fixed rate method allows you to claim a set rate per hour for the time you work from home. You don’t need a dedicated home office to use this method. You are also able to claim separately for the decline in value of assets like computers. The actual cost method allows you to claim a deduction for the actual expenses you incurred working from home. If claiming work from home expenses under either method it is important the claim is supported by a diary log of hours or other similar detailed records.
Superannuation Contributions
Anyone under the age of 75 can claim a tax deduction for superannuation contributions of up to $27,500. Remember to ensure all eligibility criteria has been met and you have given your fund a notice of intent to claim in the approved form. Be mindful of any contributions your employer may have made also when determining your annual cap.
Consider utilising any unused carry forward concessional contribution caps, where eligibility criteria is met. Any unused concessional contributions from 2019 will expire after this year, so now’s the time to act.
You can make super contributions on behalf of your spouse (married or de facto) as long as you meet the eligibility criteria and your super fund allows it. Additionally, you may be eligible for a tax offset of up to $540 on superannuation contributions of up to $3,000 made on your spouse’s behalf if their income is less than $37,000 per annum.
Investment Properties
A building depreciation report will allow you to claim depreciation and capital works deductions on both the property and capital items within the property. The report needs to be prepared by a Quantity Surveyor and the cost of the report is tax deductible.
Prepayments of interest on loans for rental properties (and other investments) can be made for up to 12 months and claim the full amount as a tax deduction.
If you are planning the sale of an asset, the date you sign the contract is the date of sale, not the date of settlement. This will be relevant for any Capital Gains calculations.
Donations
Donate before 30 June to a Deductible Gift Recipient (DGR) registered charity and get a tax deduction. You can confirm a charity’s status in the ABR lookup here Deductible gift recipients | ABN Lookup (business.gov.au)
