TAX PLANNING

The end of the tax year will soon be upon us with 30 June just around the corner. It’s a great time to look at your expected taxable income and profit for this financial year which will allow you to get your affairs in order and plan how to take advantage before 30 June. There are a few key things to think about as you get started on your plan:</span?

Tax Related Deductions

Think about actions you can take now, before the tax year ends, which will benefit you when it comes time to file your return. For example, are you able to:
  • Pay fourth-quarter super contributions before 30 June, instead of waiting until 28 July
  • Pay upcoming expenses before June 30 – items like rent, loan interest, business insurance, car insurance, memberships and subscriptions
  • Make a voluntary contribution to your superannuation fund
  • Make a donation to a registered charity
  • Address bad debts – look through aged receivables to assess if you have any invoices to be written off
  • Instant asset write-off can be beneficial. Between 12 March 2020 and 30 June 2020, the instant asset write-off specifics are:
    • The threshold amount for each asset is $150,000 (up from $30,000)
    • Expanded eligibility to cover businesses with an aggregated turnover of less than $500 million (up from $50 million)
    • You may also want to consider buying equipment that you need before 30 June — EOFY sales offer an extra opportunity for savings.
  • Working from Home deductions.
    • The Australian Taxation Office (‘ATO’) has announced a temporary, simplified method for individual taxpayers to claim deductions for additional running expenses incurred (e.g., additional heating, cooling and lighting costs), as a result of working from home due to the COVID-19 pandemic. Individuals may claim a deduction for all running expenses incurred during 1 March 2020 to 30 June 2020, based on a rate of 80 cents for each hour an individual carries out genuine work duties from home.
  • Start-up expenses may also be deducted for activities like procuring accounting or legal advice on business structure, as well as fees for establishment of the business structure (e.g. an ASIC company registration fee).

COVID-19 Impacts

If you’ve been impacted by the ongoing COVID-19 pandemic, you may be eligible for further assistance, such as:
  • Stimulus packages announced by the Australian Government (e.g. Jobkeeper, Cashbooster, and other grants.)
  • The ATO may also offer assistance by:
    • Extending deadlines for debt payments or tax form lodgement
    • Remitting penalties or interest charged during the time you were impacted.
    • Expediting refunds owed
    • Setting up a tailored payment plan for your individual circumstances, including an interest-free period

Trust Distribution Actions

Generally, trustees must make valid distribution resolutions prior to 30 June (or earlier if specified as such in the trust deed) to appoint trust income to eligible beneficiaries. It’s important to note that if trustees fail to make valid appointment resolutions before 30 June, the trustee can be assessed at the top marginal tax rate of 47% on all the Trust’s taxable income.

Other EOFY Actions

  • Employee payment summaries must be sent to all employees by 14 July
  • Taxable Payments report should be prepared for the ATO, if your business is in construction and building.

Review Insurances

You may need to review and update your level of cover if your circumstances have changed. Make sure you carefully review product disclosure statements (PDS) for your insurance policies to ensure you’re covered appropriately. To secure the best deal from your insurance company, you may wish to engage an insurance broker.

Review Your Business Structure

If your business has expanded or is experiencing growth, it may be an appropriate time to change your business structure. If you choose to do this, be aware that compliance and taxation regulations will change, along with your business structure. Financial and tax advice is important during this process.

Review Your Finances

Check in with your accountant to review your finances, including whether you met your targets for this financial year. Assess where you can improve next year, and make sure you create a cash flow forecast which will help manage any potential shortfalls while ensuring you can pay staff and suppliers.

How can Halkin Business Partners help?

Speak to our tax specialists today to see how Halkin Business Partners can help you with your financial needs.

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