It is that time again when we need to begin to ensure we are ready for the end of the financial year. For some this means running financial calculations to find how best to be positioned for year end; for others it means simply ensuring you have all your expenses and receipts available for when you need them.
Our team will be reaching out to clients over the coming weeks to check you are on track with your financial affairs ensuring we can take advantage of any tax strategies prior to year-end to maximise your position. In the meantime we’ve compiled some things to consider as part of this process.
For those wishing to claim a tax deduction in the current financial year for any additional super contributions, these must be received by the fund by the 30th of June. If one day late, you will have to claim next year. Please remember to give yourself some room and aim to have these paid by the 20th of June if possible.
The concessional contributions cap for this year is $25,000 regardless of age. Unused concessional cap carry forward can be utilised if you have a super balance of less than $500,000. Unused cap amounts are available for a maximum of five years and will expire after this.
Super for your employees
If cashflow allows, it makes sense to pay your June quarter super obligation for your employees prior to the 30th of June. This ensures you are able to claim that quarterly expense in the current financial year. Be aware of processing cut-off times if using a clearing house. Again, it is best to make payment by 20th of June wherever possible.
Instant asset write-off & Temporary full expensing
Instant asset write-offs have been extended as part of the Governments COVID-19 stimulus package. The threshold has now been increased from $30,000 to $150,000 for New or Second Hand assets first used or installed ready for use between 12 March 2020 and 30 June 2021, and purchased by 31 December 2020.
New depreciating assets
From 7.30pm AEDT on 6 October 2020 until 30 June 2022 most businesses can immediately deduct the business portion of the cost of eligible new depreciating assets. For businesses with an aggregated turnover of less than $50 million, temporary full expensing also applies to the business portion of eligible second-hand depreciating assets.
Eligible entities get the offset by choosing to carry back losses to earlier years in which there were income tax liabilities. The offset effectively represents the tax the eligible entity would save if it was able to deduct the loss in the earlier year using the loss year tax rate. As it is a refundable tax offset, it may result in a cash refund, a reduced tax liability or a reduction of a debt owing to the ATO.
The eligible entity does not need to amend the earlier income years to claim the offset.
Working from home
Working from home continues to be commonplace in many workplaces and the 80 cents per hour shortcut method is back for another year, however to maximise your deductions, you should understand what you can claim.
Expenses incurred by employees, or those who are self-employed, which are directly connected with you earning your income can be claimed, these include:
- Utilities such as heating, cooling and lighting
- Mobile and landline phone expenses for work calls
- Internet connections
- Computer consumables
- Repair costs for home office equipment
- Depreciation of home office equipment
- Immediate write-off for equipment less than $300.
If keeping receipts and records for this all seems too hard the ATO have introduced a shortcut method of claiming 80 cents per hour. This shortcut was available last financial year and is available again this financial year.
It is important to note that expenses such as rent, interest on your mortgage and insurance can only be claimed if your home is a “Place of Business.”
Talk through your situation with us to find the best method for you.
Many of you who operate your businesses through a family trust will know that every year the Trust must pass a resolution before the 30 June as to which beneficiaries will be used and what amount of income will be distributed, either in dollar or percentage terms. We will ensure that every one of your trusts has executed this resolution by June 30.
As always, the q4 team are here to answer any questions or assist you with your business needs. Feel free to reach out soon to ensure you are prepared for tax time.
Senior Client Manager