As we approach the end of the financial year it’s a good time to start thinking about what you could do to minimise your tax liability.
- The ATO has continued to update their guidance which outlines their interpretation of key legislative provisions which govern trust distributions amongst family groups. Where this impacts your group, we will discuss this with you in your year end tax planning meeting or you can contact us directly to discuss.
- Trust minutes/resolutions: Discretionary trusts have to resolve where they would like to distribute their income for the 2023 financial year prior to 30 June 2023. We will discuss distribution strategies with the trustees and assist with the documentation of these ahead of 30 June.
Tax Planning Tips & Information
- The company tax rate for base rate entity companies remains at 25% for base rate entities.
- The loss carry-back rules are still available which means eligible companies can claim a refundable tax offset using the new loss carry-back measures when they lodge their 2023 financial year tax returns where tax was payable in the prior year. This measure has not been extended past 30 June 2023.
- Temporary full expensing for asset purchases is available through to 30 June 2023 but importantly is scaled back significantly from 1 July 2023 so if you are considering any capital investment in your business, talk to us to ensure you obtain the full benefit of these provisions.
- Superannuation: Individuals should consider whether superannuation contributions should be made up to the concession cap ($27,500 for 2023). Don’t forget that carry-forward unused concessional contributions are available which allow individuals to claim an additional tax deduction if a superannuation contribution is made to use up unused concessional contributions from the 2019, 2020, 2021 and 2022 financial years. Please note, to claim a personal superannuation contribution, a notice of intent must be lodged with the superannuation fund.
- Carry-forward unused concessional contributions are available which allow individuals to claim an additional tax deduction if a superannuation contribution is made to use up unused concessional contributions from the 2019, 2020, 2021 and 2022 financial years.
- Capital Gains Tax: If you have made a capital gain during the 2023 financial year, you may consider realising a capital loss (if appropriate) on another asset to offset the capital gain.
- Cash flow: Vary PAYG instalments for the June 2023 quarter (if appropriate). This is best done in conjunction with an estimate of your 2023 tax position.
- Working from home deductions: The short cut method of 80 cents per hours when working from home has changed from 1 July 2022. You can now use the Fixed Rate method and claim 67 cents per hour for the 2023 financial year where you worked from home. Make sure you have detailed records that record the total number of hours you work from home and the expense you incur while working from home.
- Ensure that you retain receipts or substantiation for any expenses you would like to claim.
- If you travel over 5,000kms in your motor vehicle for work, consider whether you should maintain a log book or whether you need to complete a new one (to be completed every five years). If you are relying on a log book prepared from a previous year you also need to record the odometer reading as at 30 June.
- Trading stock: Conduct a stocktake at 30 June, write off any obsolete or damaged stock and choose your stock valuation method. You can use cost, market selling value or replacement value, for each item, and this can be changed each year. If you are a small business entity and your trading stock value has not moved by more than $5,000 you do not have to do a stocktake.
- Superannuation (businesses): Pay your super before 30 June in order to get a tax deduction for the 2023 financial year. Super contributions need to have been received by the superannuation fund by 30 June.
- Accrued expenses: if you have a presently existing liability to pay an amount at 30 June, even where you may not have an invoice, the amount should be accrued to enable a tax deduction to be claimed in the current year.
- Prepaid expenses: If your business is a small business entity, you are entitled to a tax deduction where expenses covering a period of up to 12 months are prepaid.
- Bad debts: Review and write off bad debts to ensure a deduction in 2023 financial year.
- Bonuses to staff: if you pay bonuses to employees, a simple accrual may not be enough to ensure a deduction at 30 June. To claim a deduction you must ensure that you have presently existing obligation to pay the bonus and that it is quantifiable.
Can we give you a hand?
If you would like any further detail on the above, or for an estimate of your tax position for the 2023 financial year, please contact your Holman Hodge advisor.