Before we say goodbye to the 2021 financial year, have you considered the following last-minute strategies to manage your tax before the year is out?
Bring Forward Expenses
If you have any expenses due in July/August 2021, then it may be beneficial to look at paying them off before the end of the financial year. This could include your employer superannuation contributions for the June quarter which are due on 28 July 2021.
Similarly, delaying revenue until July will push back the tax payable to the 2022 financial year.
Now is the time to review your receivables. You can claim a tax deduction for any bad debts however you must write them off before the end of the financial year to claim a deduction. Don’t forget to keep evidence that the debt is irrecoverable and evidence proving your actions to recover the debt.
If your business is looking to purchase any new assets then timing the transaction to before 30 June will mean you will be entitled to the deduction in your 2021 tax return. Under the simplified depreciation rules, the government is allowing businesses to expense the full cost of an asset at the time of purchase depending on the purchase date.
|Date asset was purchased and ready to use||Deduction allowed in year of purchase|
|12 March 2020 – 6 October 2020||100% deduction for assets < $150,000|
|6 October 2020 – 30 June 2022||100% deduction for all eligible assets|
Unfortunately passenger vehicles are still subject to the usual car limit and the allowable deduction for all assets is limited to just the business portion of asset.
In the 2021 financial year individuals have a concessional contributions cap of $25,000 (increasing to $27,500 in 2022). This means they can contribute up to $25,000 tax deductible contributions into their superannuation fund (includes SG paid by your employer).
Business owners can make an employer contribution and claim the deduction in their company tax return, or alternatively individuals can make a personal contribution to reduce their taxable income as long as they lodge a Notice of Intent to Claim form with their super fund before their tax return is lodged.
Did you know that you can now contribute more by taking advantage of your unused concessional cap amounts since 2018-2019?
There are a number of conditions and considerations so it’s worth speaking with one of the team at Care Accounting or with your super fund before making additional contributions.
Loss Carry Back Tax Offset
If an eligible entity makes a loss in the 2020, 2021, 2022 or 2023 financial years, under the Loss Carry Back Tax Offset, it may be possible to carry back the loss to prior years and receive a refund of tax that was paid in a prior profit year (from 2019 onwards).
Your accountant at Care Accounting will discuss your options when we prepare your end of year accounts.
This year many businesses have been fortunate enough to access government grants and stimulus measures. As a business owner you need to know which are/aren’t taxable.
|Government Stimulus||Tax Treatment|
|JobKeeper||Taxable – but you can also claim the associated wages expense as a deduction.|
|CashFlow Boost||Not taxable|
|NSW Small Business COVID-19 Grant||Taxable|
|NSW Small Business Fees & Charges Rebate||Taxable|