Tax tips

8 Business Tax Tips

The best way to save tax in business is to consider and apply strategies prior to 30 June each year. After year end, the options available to improve your tax position are severely restricted. Activ8 are business tax specialists. In this article we share some of our best tax tips.

Tip 1. Maximise Your Super Contributions

Superannuation is a fantastic vehicle for tax effective investments. We recommend that every year you maximise the amounts you put into super. The maximum you can claim each year changes and you need to take into account contributions made by your employer, including your own business, and personal contributions. Remember to speak to your financial planner about how super fits into your personal financial plan. Our advice is purely focused on the tax benefits alone.

Tip 2. Take Advantage of the Instant Asset Write Off

The temporary full expensing of assets purchased for business use has been extended to 30 June 2023. This means that businesses can get an immediate tax deduction for the full amount of the asset’s cost in the year it is purchased.

Therefore if you are planning some equipment purchases, get them completed before 30 June to maximise the deduction in this financial year.

Note – cars are capped to a maximum claim of $60,733 for the 2022 year.

Tip 3. Do a Stocktake at 30 June

Does your business have trading stock? Do a stocktake at 30 June. This not only helps to get accurate profit figures, but you are eligible for a tax deduction for obsolete or worthless items still on the shelf.

Tip 4. Write Off Your Bad Debts

Subject to how you report income on your BAS, you have likely paid tax and GST on income you have invoiced but not yet collected. If you have deemed the debt to be uncollectible, you are entitled to a tax deduction as well as recouping the GST paid to the ATO.

Tip 5. Pay Your Employees’ Super on Time

If you pay super late, you will miss out on the tax deduction. In addition the ATO will impose interest and penalties for late super. We recommend that super is paid each pay cycle so you’ll never be late and you don’t get a big lump sum at the end of the quarter.

Another tip for super at year-end is to pay any June quarter before 30 June to get the tax deduction in the current year. Note – allow 7-10 days processing time to ensure the superfund processes the payment before 30 June.

Tip 6. Keep a Log Book For Your Business Cars

A compliant log book is essential to maximise your motor vehicle claim. Whilst they can be cumbersome to keep a log book, they are only required for 12 weeks and it remains valid for 5 years.

Tip 7. Defer Income to Next Year

If it makes sense to do so, deferring income until after 30 June means you pay tax on it next year, not this year. You can do this by holding off invoicing until 1 July, where appropriate.

Tip 8. Prepay Expenses

Cashflow permitting, you can prepay expenses like interest and rent up to 12 months in advance to boost the tax benefit in this financial year. This does not apply to stock purchases, but basically any other business expense can be paid before 30 June to allow the tax deduction in this year. This is particularly good where you have had a good year and have a bigger than usual impending tax bill.

We hope you find these tips insightful. There are plenty of other tax strategies you can put in place to minimise the tax you pay. It’s never too late to start taking advantage of tax benefits.

If you need any guidance or advice in relation to these tips, contact Activ8 Accountants & Advisors and we can guide you through them. Call us on 07 3367 3366.

 

superannuation changes

Superannuation Changes from July 2022

Several key superannuation contribution changes are set to take effect from 1 July 2022. These changes create opportunities for all SMSF members, young and old, to grow their retirement savings.

WHAT ARE THE CHANGES?

Originally announced in the 2021 Federal Budget, the following changes apply from 1 July 2022:

  • Individuals of age 67- 74, will no longer need to meet a work test to make voluntary, non-deductible, contributions
  • Individuals up to the age of 75, with a total super balance under $1.7 million, will have the opportunity to make large non-concessional contributions (possibly up to three years’ worth) in a single year
  • The minimum age to make downsizer contributions will reduce to 60, allowing more individuals to use the proceeds from the sale of their home, to fund their retirement
  • The Superannuation Guarantee (SG) rate will increase to 10.5% p.a. for all and the $450 minimum income threshold for SG contributions, will be removed.

Superannuation rules can be very complex.  Should you require further assistance, please feel free to contact our office for further information on (07) 3367 3366.

 

stapled super

Stapled Super Changes

Employers get ready – there’ll soon be an extra step involved when it comes to hiring new employees – if they don’t choose a super fund.

You may now need to request their ‘stapled super fund’ details from the ATO.  A stapled super fund is an existing super account of an employee that follows them as they change jobs. This change aims to stop your new employees paying extra account fees for unintended super accounts set up when they start a new job.

You may need to request stapled super fund details when:
•           your new employee starts on or after 1 November 2021
•           you need to make super guarantee payments for that employee, and
•           your employee is eligible to choose a super fund but doesn’t.

What you need to do from 1 November 2021

Step 1: Offer your eligible employees a choice of super fund

You need to give your eligible new employees a Super standard choice form and pay their super into the account they tell you on the form. Most employees are eligible to choose what fund their super goes into.

There is no change to this step of your super obligations.

Step 2: Request stapled super fund details

If your employee doesn’t choose a super fund, you may need to log into the ATO Online services and go to ‘Employee Super Accounts’ to request their stapled super fund details. If you don’t have online access then Activ8 can do this for you.

The ATO will provide your employee’s stapled super fund details after they have confirmed that you are their employer.

If the ATO provides a stapled super fund result for your employee, you must pay your employee’s super using the stapled super fund details they provide you.

In most cases, a request can be made after you’ve submitted a TFN declaration, or a Single Touch Payroll (STP) pay event linking the new employee to your business.  Responses will usually be received through the online portal in minutes.

Step 3: Pay super into a default fund

You can pay into a default fund, or another fund that meets the choice of fund obligations if:

  • your employee doesn’t choose a super fund, and
  • we have advised you that they don’t have a stapled super fund.

Remember, an employer cannot provide recommendations or advice about super to its employees, unless the business is licensed by the Australian Securities and Investments Commission (ASIC) to provide financial advice. Penalties may apply if your business fails to meet the “choice of super fund” obligations.

Full details can be found here on the ATO website.

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Taxation and Superannuation Updates for New Financial Year

As the new financial year commences, we’d like to provide some timely reminders, key dates and information ahead of finalising your tax affairs for 2020/21, and some things you need to be aware of over the next 12 months.

Key Dates for July

14 July – Single Touch Payroll finalised

21 July – Monthly BAS return for June due.

28 July – Make quarter 4 super guarantee contributions to funds by this date (if not paid earlier)

 

Three End Of Financial Year Payroll Tasks

1. Single Touch Payroll Finalisation

Due date is 14th July 2021

2. All Employers (including those with closely held employees) need to be using Single Touch Payroll (STP) Compliant software from 1 July 2021

​​For example if you operate your business through a company or trust structure which employs you, you will need to adopt STP compliant software into your business.  Most accounting software providers have a solution available, speak to your bookkeeper or accountant if you aren’t sure.

3. Reminder that the Superannuation Guarantee (SG) Rate increases from 9.5% to 10% from 1 July.  Look out for any communications from your payroll software provider

Super changes for 2021/22

 

  • SGC Rate: As mentioned above, the SGC rate increases to 10% for all wages paid from 1 July.
  • The concessional contributions cap has now increased to $27,500, up from $25,000.
  • The non-concessional contributions cap is now $110,000, up from $100,000.

 

Claiming Work-Related Deductions

When you do your tax do you just claim “what you claimed last year”?

Technically that is not allowed. You need to be able to substantiate your deductions and circumstances may change so you need to be considering that.

For example, if you are working from home more, then your travel and laundry expenses will be substantially different.

The ATO is data matching everything this year and checking if people are claiming the same as last year.

As the pandemic forced swathes of the workforce to work from home, work-related expenses are expected to spike for the 2021 income year. However, the ATO also expects some expenses, like travel, will decrease compared to prior years.  In general, the ATO expects to see a downward trend in expense claims related to clothing & laundry, self-education, car and travel.