As they say, in life, you can be certain of two things, death and taxes. We cannot help with the first, but with some good strategic tax planning we can assist you with managing your taxes to benefit you.
We have compiled this summary of some effective tax planning strategies, that when implemented wisely can provide favourable tax outcomes for you.
As this summary is provided as general information and does not take into consideration your specific circumstances, we strongly recommend you call us to book in a time to speak with a qualified iCompass tax accountant to discuss your specific requirements on 1300 554 948 or get in touch using the form below.
Deductible Superannuation Contributions
You can make a superannuation contribution into your superannuation fund as a deductible concessional contribution to gain a tax deduction in your Tax Return. You must note that there are limits on how much you are entitled to contribute into superannuation each year without triggering higher tax penalties, so we recommend you speak with your superannuation fund to identify any available amounts within your concessional cap that you could consider contributing.
Prepayment of Expenses
If you are an eligible small to medium business and you rent an office, consider prepaying your rent for up to 12 months before 30 June which will provide a deduction in the year you are prepaying the expense. This strategy could also apply to other business expenses such as insurance, licences & registrations, subscriptions, as some examples.
Deferring Income
Generally, income is recognised on the date you invoice for the sale / service and not when it is actually paid. Deferring your invoicing until after 30 June pushes the income into the next financing year, decreasing the resulting tax on that income this financial year, but the tax will still need to be paid however in the following financial year. Considerations of the impact on cash flow, sales results, profits, and client relations needs to be considered if looking to defer invoicing.
Asset Purchases
Eligible small to medium businesses considering purchasing a fixed asset (car, machinery, equipment, etc) can take advantage of the temporary full expensing rules to enhance deductions. The Temporary Full Expense will remain active until 30 June 2023.
Moving forward the Temporary Full Expense option will cease, but eligible small businesses with an aggregated turnover of less than $10 million will be able to immediately deduct the full cost of assets that cost less than $20,000 which are first used or installed ready for use between 1 July 2023 and 30 June 2024. If you are considering buying such an asset in the future, then bringing this purchase to within this date range will be a worthy consideration.
NOTE: it is generally not recommended to buy an asset just to achieve a deduction.
Small Business Technology Investment Boost
Small businesses with an aggregated annual turnover of less than $50 million will be able to deduct an additional 20 per cent of the expenditure incurred for the purposes of business digital operations or digitising its operations. This will include business expenses and depreciating assets such as portable payment devices, cyber security systems or subscriptions to cloud based services. An annual cap of $100,000 of expenditure applies. This measure is listed to apply to expenses incurred during the period from 7:30pm 29 March 2022 until 30 June 2023.
NOTE: the above measure is not passed as law at time of release of this article. Until passed by law, the claims will not be avalaible.
Small Business Skills and Training Boost
Small businesses with an aggregated annual turnover of less than $50 million will be able to deduct an additional 20% of expenditure that is incurred for any eligible external training courses provided to their employees by registered providers in Australia. There is no cap on the amount of boost that can be claimed. This measure is listed to apply to expenses incurred during the period from 7:30pm 29 March 2022 until 30 June 2024.
NOTE: the above measure is not passed as law at time of release of this article. Until passed by law, the claims will not be avalaible.
Selling of Capital Assets
If you are looking at selling a Capital Asset (ie: shares, an investment property, etc), the date of signing the contract is when the asset is considered sold for Capital Gains Tax (CGT) purposes and not when the asset sale actually settles. This allows an opportunity to consider if signing this financial year or next is going to be more favourable for your CGT outcome. If you are expecting a high CGT outcome, signing after 30 June will move this event into the next financial year pushing any resulting CGT into the next financial year as well.
Write off Bad Debts
You are entitled to a deduction for any bad debts when written off. Keeping your Accounts Receivable up to date is always recommended, but a special review before 30 June is a simple and valuable process, provides a deduction, and keeps your accounts current.
Electric Motor Vehicle (EV) FBT Exemption
From 1 July 2022 employers will not have to pay Fringe Benefits Tax (FBT) on eligible electric motor vehicles and their associated motor vehicle expenses. Therefore, if you are looking to purchase a new company vehicle for your use or to provide to an employee which includes private use, it may be a worthy consideration purchasing an electric motor vehicle to reduce any applicable Fringe Benefits Tax (FBT) to the company.
Inventory Stocktake
A process often neglected in conducting a Stocktake, resulting in stock figures not correctly addressing the decreased value of obsolete and damaged stock. Conducting a stocktake and appropriately writing down the value of obsolete and damaged stock can provide deductions, as well as providing more accurate stock on hand values for your business planning.`