Consider these tax saving strategies to minimise your 2022 tax!
- Instant Asset Write off for assets costing up to $150000 (for each asset) - this means that for every asset that you purchase between now and 30 June which costs less than $150000 a tax deduction can be claimed to reduce the profit in your business.
- Accelerated Depreciation on new assets over $150000 – You can claim a deduction of 50% of the asset cost with normal depreciation rules applying to the remaining 50%.
- Catchup Contributions – If your individual member account balance is less than $500000, you are able to contribute up to $25000 to superannuation as a tax deduction each year but also make use of ‘catchup contributions’ if you didn’t contribute your full $25000 in either the 2018/19 or 2019/20 financial years. Eg if you only contributed $10000 to super in 18/19 and $15000 to super in 19/20, you have catchup contributions of $15000 in 18/19 and $10000 in 19/20 that you can make in 20/21 totalling $25000 on top of the $25000 limit for the 20/21 year allowing $50000 as an additional tax deduction if the contribution is received by the Fund by 30/6/21.
- Tax Minimisation - With the company tax rate decreasing to 26% for the 20/21 financial year are your entities working for you in minimising your tax?
- Reducing dividends payable to you from your company by repaying loans for drawings by 30/6/21.
- Doing a stocktake – where you are holding stock that hasn’t been sold & is now obsolete or expired, perform a stocktake omitting these unsaleable items so that you can get a tax deduction for the expense of these items.
- Motor Vehicle Expenses – where your vehicle has high business use, have you completed a logbook over 12 consecutive weeks to determine your business v private use? Have you kept records of your costs including Fuel, Registration, Insurance, Repairs, Purchase Cost & Date of vehicle for depreciation, loan statements to claim interest so we can maximise your claim?
- Capital Gains – have you sold any assets this financial year that you may be able to offset with capital losses within your portfolio? Consider selling assets before 30 June to realise capital losses so they can be applied to capital gains.
- Necessary spending – is there any spending that you have coming up that you can bring forward and do before 30 June. We aren’t fans of spending money to save tax but where you have a cost that the business is going to have regardless of timing, consider purchasing before the end of the financial year and bringing the tax deduction into the 20/21 financial year.
- Employee bonuses – Is there anyone in your business that you would like to thank for their contribution to the success of your financial year? Consider rewarding them and securing them in your business by paying them a bonus or incentive and paying this before 30 June.
- Are you making the most of the Marginal Tax Brackets for individuals in your family group?
Have you considered:
a) The spread of taxable income across family members
b) Paying wages commensurate with the duties that family members are performing in your business
c) Whether your company has sufficient franking credits to pay dividends?
12. Losses within your group – is there an ability to oncharge costs to profit making entities from entities with losses?
13. Personal Services Income – if your business generates income principally from your own labour, have you paid attention to passing the 80/20 test and doing work in May/June for unrelated clients? Do you meet the results test in your business? Are you able to do some work for other customers between now and 30 June to pass the 80/20 test?
14. Spouse Superannuation Contributions – if your spouse earns less than $37000, have you considered making superannuation contributions of up to $3000 on their behalf so you can claim the spouse contribution of up to $540 as a tax offset in your tax return?
Talk to your accountant further about any strategies you think are applicable to you and enjoy less tax to pay as a result!
