Key tax considerations:
Temporary Full Expensing – this means where a business buys a depreciating asset we should be able to write it off completely for tax rather than depreciate over a number of years. For businesses with turnover under $50m this applies to second hand assets as well. Please note that the car threshold remains in place so we can only claim up to $64,741 for non-commercial vehicles (a truck would not be subject to this threshold)
PLEASE NOTE THAT FROM 1 JULY THIS WILL END AND THE INSTANT ASSET WRITEOFF WILL KICK IN MEANING ONLY ASSETS WORTH UP TO $20K CAN BE IMMEDIATELY WRITTEN OFF.
Prepayments – small businesses should be able to deduct prepayments they make before 30 June. e.g. prepaid marketing or insurance
Superannuation – you only get a deduction for superannuation once paid. Please ensure you have paid your superannuation for all staff before 30 June (usually 10 days before)
Personal superannuation – owners may wish to catch up super under new rules that allow you to carry forward unused contributions (you usually get a $27.5k cap of deductible contributions each year – note this includes employer contributions). You can carry forward any unused cap up to five years and these rules began from the 2019 year
Writing off stock and bad debts – clients should look to see if stock is obsolete or any debts may be bad so we can look to write these off before 30 June
Upcoming changes to personal income tax rates – the tax brackets should change from 1 July 2024 so when planning distributions we may be able to hold funds in a corporate structure longer before distributing to individuals
Distributing to family members – the ATO has narrowed its interpretation of trust distributions, specifically reimbursement arrangements so careful consideration is required when we are planning trust distributions
Trust A has taxable income of $80,000 ahead of 30 June 2023. It often distributes income to the parents and children without paying this money across. The parents already have taxable incomes of $180,000 each.
Ahead of 30 June 2022 the following decisions are made:
– Not to distribute to the children given ATO changes
– Distribute and pay all income to a related corporate entity owned by the parents.
– Look to pay out the distribution income as dividends in 2024 without breaching the new $200,000 highest marginal rate.