End of Financial Year Tax Planning Tips

15th June 2020

Highlights

  • With less than four weeks left of the financial year, now is a great time to do some tax planning and ensure you take advantage of the opportunities available to you to keep your tax to a minimum. 
  • Scott Lindeblad from ACS Qld Preferred Accounting Partner William Buck highlights the top tax planning tips for individuals and businesses to ensure you can legitimately minimise your tax.
  • If you have not done any tax planning yet, reach out to Scott Lindeblad at William Buck for a complimentary 30-minute consultation.

With less than four weeks left of the financial year, now is a great time to do some tax planning and ensure you take advantage of the opportunities available to you to keep your tax to a minimum.

Below I have listed the top tax planning tips for individuals and business owners, so make sure you take a look.

Individuals

1.     Top-up superannuation contributions

  • Concessional contribution cap of $25,000 per year
  • Includes personal contributions you intend to claim a tax deduction for, employer superannuation guarantee and salary sacrifice contributions.
  • Where your total concessional contributions are less than $25,000 for the financial year, you may have the opportunity to make a ‘top-up’ contribution before 30 June 2020 and claim it as a tax deduction against your assessable income.
  • Ensure you complete your ‘s290 - Notice of Intent to Claim a Superannuation Deduction’ notice and submit to your superannuation fund before you lodge your tax return.

2.     Work from home deductions

There are three ways you can calculate your work from home deductions:

Shortcut method

  • Only applies from 1 March 2020 to 30 June 2020 and is calculated at an hourly rate of 80 cents per hour.
  • This rate covers all your work from home expenses, including phone, internet, electricity and decline in value of equipment.
  • Note, you cannot claim any other expenses for working from home if you choose to use the shortcut method.

Fixed Method

  • Allows you to claim a deduction of 52 cents per hour for the time you work from home.
  • You must have a dedicated work area, such as a home office when you work from home.
  • Rate does not include phone, internet, computer consumables.

Actual costs

  • Can claim a percentage of actual costs incurred.
  • Must have a dedicated work area and can clearly identify your costs.
  • May be more beneficial to claim a portion of your expenses as opposed to a set rate per hour as described above.

3.     Review your investments

  • Where you have capital gains this financial year, you may want to look at offsetting these with available capital losses.
  • Review your existing portfolio of investments to see if it is time to offload some of the under performing assets and reduce the tax payable on other capital gains made this year.

Businesses

1.     Instant Asset Write-Off (IAWO)

  • Are there any new capital assets you need for your business – if less than $150,000, you can take advantage of the IAWO and claim 100% deduction for 2020.
  • Can be new or used assets.
  • Asset must be received and installed ready for use prior to 30 June 2020.
  • Motor vehicles – still capped at car limit of $57,581 and adjusted for any private use
  • Has been extended until 31 December 2020.

2.     Backing Business Investment – accelerated depreciation

  • If you have larger asset purchases in mind i.e. greater than $150,000, you have until 30 June 2021 to purchase the asset and bring forward an additional 50% deduction in the first year.
  • Only applies to new assets purchased, not used assets.

3.     Defer income

  • Review the work you have completed recently and determine whether it could be invoiced in July.
  • Review whether you have received any deposits for upcoming work – ensure this is allocated to your balance sheet and not income so you do not pay tax on it this financial year.

4.     Review your trade debtors / accounts receivable

  • Do you have any outstanding debts that you do not believe will be recoverable? Write them off in your books before 30 June 2020 to claim the tax deduction now.

5.     Review your stock

  • Complete a stock take and write-off any obsolete stock.

6.     Pay employee superannuation prior to 30 June 2020

  • Where you employ staff, pay their quarterly superannuation guarantee prior to 30 June 2020 and claim the tax deduction now.

7.     Repay loans from a private company

  • If you have borrowed money from your private company (known as Division 7A loans), you may have to meet a minimum repayment to avoid additional tax.
  • To reduce the impact of these loans, contribute any surplus cash back into the Company before 30 June 2020.

8.     Complete your trust distribution minutes

  • Where you have a family or discretionary trust, make sure you review how your profit is going to be distributed this financial year and sign your trust distribution minutes prior to 30 June 2020.
  • If this is not done, the profits of the trust may be taxed at the highest marginal tax rate.

9.     Record keeping

  • We are coming to the end of another financial year and if you are still using excel or paper receipts for your records, its time to undertake a digital transformation.
  • Cheap and efficient accounting software such as XERO and Hubdoc will transform the amount of time you spend on administration, freeing you up to focus on your business.

Summary

Time is running out to take advantage of these tax tips, so do not leave it until the last minute and ensure you maximise your tax deductions for the year.

If you are unsure about any of the above tips or would like to undertake tax planning before the end of the year, feel free to contact me to discuss your personal situation.

 

William Buck is ACS Queensland’s Preferred Accounting Partner. Scott Lindeblad provides complimentary 30-minute consultations for ACS Queensland members. Email Scott at Scott.Lindeblad@williambuck.com to arrange.

 

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