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.
What’s new for 2022?
- The concessional cap for superannuation contributions has increased from $25,000 to $27,500 for the 2022 financial year. Don’t forget, to claim the deduction, your super fund will need to have received the contribution prior to 30 June and you will need to provide them with a notice of intent to claim a deduction.
- The ATO has released a Tax Ruling and Taxpayer Alert which outlines their interpretation with regards to key legislative provisions which govern trust distributions amongst family groups. Where this impacts your group, we will be in touch to discuss in more detail.
- The ATO has also released guidelines which outline where the ATO considers the allocation of profits from professional practices to be low, medium, or high risk. Again, if this impacts your business, we will be in touch to consider how we apply these guidelines to your practice.
Tax Planning Tips & Information
- The company tax rate for base rate entity companies for the 2022 financial year is 25%.
- 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 2022 financial year tax returns where tax was payable in the prior year.
- The various SA COVID-19 grants paid throughout 2022 will be non-assessable income if received so please ensure good records are kept to ensure the correct treatment is applied.
- Temporary full expensing for asset purchases is available for the 2022 financial year and importantly is available until 30 June 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.
- 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 and 2021 financial years.
- Capital Gains Tax: If you have made a capital gain during the 2022 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 2022 quarter (if appropriate). This is best done in conjunction with an estimate of your 2022 tax position.
- Home office expenses: You can claim 80 cents per hour for the 2022 financial year where you worked from home. Make sure you have detailed records of the periods you worked 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, 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.
- Trust minutes/resolution: Discretionary trusts have to resolve where they would like to distribute their income for the 2022 financial year prior to 30 June 2022. We will prepare trustee resolutions for our clients and will send these out ahead of 30 June.
- Superannuation (businesses): Pay your super before 30 June in order to get a tax deduction for the 2022 financial year. Super contributions need to have been received by the superannuation fund by 30 June.
- 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 2022 financial year.
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 2022 financial year, please contact your Holman Hodge advisor.