With the end of the financially year looming, this is a time for businesses and individuals to look at what they can do now.
Superannuation payments are deductible in the year the super is paid. It is time to review your payroll records, and pay any superannuation accrued for employees NOW. Note that superannuation clearing houses can have delays at the end of the financial year, so ensure this is done as soon as possible.
Take advantage of concessional super contribution limits
The concessional superannuation contribution limit is $25,000 this financial year. Yhis includes employee super payments, and personal super contribution payments that you have lodged a notice of intention to claim a deduction for.
If appropriate, and cash-flow allows, consider topping up your deductible superannuation payments.
DON’T take advantage of concessional super contribution limits
This might seem counter-intuitive to the last tip. However, if you anticipate a bigger income year in 2021, or a capital gain event, it might be more appropriate to defer making those additional super contributions. Recent superannuation changes allow for a “claw back”of unused super contributions from previous years (2019 onward), providing your super balance is under $500,000.
Instant asset write-off
It has been a really tough few months for a lot of businesses, so first and foremost, we are not advocating a big spending spree in this last week.
If, however, there is a piece of equipment you are intending on purchasing in the near future, then bringing forward that decision into the current financial year will allow for an immediate tax deduction of up to $150,000.
The instant asset write-off has been extended to the end of this year, so if you are not in a position to make this sort of payment right now, you can still claim the benefit next financial year.
Home Office expenses
The ATO have introduced a temporary shortcut method for working from home expenses for the period from 1 March to 30 June, in expectation of the high requirements for people required to work from home in current conditions.
The shortcut allows for a deduction of 80 cents for each hour you have worked from home when fulfilling employment duties. Review your diaries, and ensure that you have records of the days you have been working from home.
Changes to payroll reporting this year mean that salary and wage deductions are only available as a tax deduction for employees if tax has been withheld and paid at correct rates. Double-check those director fee payments, and adjust the withholding and STP reporting so that this is correctly accounted for.
Review those long outstanding invoices – if they are not collectible, make a minute note and write them off as bad – this needs to be done prior to 30 June to claim bad debts as a tax deduction in this financial year.
Pay company tax
If possible, you should pay company tax outstanding to ensure there are amounts that can be used to pay fully franked dividends
As always the team at Care Accounting are available to answer any questions you may have so feel free to call us on 02 9970 7186