News

Year End Tax Planning

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.

Discretionary trusts

Trust minutes/resolutions: Trustees of discretionary trusts have to resolve where they would like to distribute their income for the 2024 financial year prior to 30 June 2024. We will discuss distribution strategies with the trustees and assist with the documentation of these ahead of 30 June.
Careful consideration needs to be had with regards to trust distributions across family groups. The ATO has provided guidance which details their position with regards to this and where it impacts your group, we will discuss this with you in your year end tax planning meeting. Alternatively you can contact us directly to discuss.

Tax Planning Tips & Information

The company tax rate for base rate entity companies remains at 25%.
The broad temporary full expensing rules for assets purchased ceased on 30 June 2023. From 1 July 2023, if you are a small business (aggregated turnover less than $10 million) you can claim an immediate deduction for assets purchased under $20,000. Note, these measures were announced by the government as part of the 2024-25 Budget, however, are not yet law.
Superannuation: Individuals should consider whether superannuation contributions should be made up to the concession cap ($27,500 for 2024). 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, 2022 and 2023 financial years. Please note, to claim a personal superannuation contribution, a notice of intent must be lodged with the superannuation fund. This is the last year that any unused cap amount for 2019 can be utilised.
Capital Gains Tax: If you have made a capital gain during the 2024 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 2024 quarter (if appropriate). This is best done in conjunction with an estimate of your 2024 tax position.
Working from home deductions: You can use the Fixed Rate method and claim 67 cents per hour for the 2024 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. You can also use the actual cost method.
Ensure that you retain receipts or substantiation for any expenses you would like to claim such as those related to your work, self-education, travel and donations.
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 2024 financial year. Super contributions need to have been received by the superannuation fund by 30 June – confirm with your software/clearing house provider if there are any cut-off dates to ensure this occurs.
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 2024 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.