Business Income and Expenses.
Consider strategies to defer income until after 30 June, or bring expenses forward into June, especially if you expect lower income for next year.
Ensure that your tax deductions are allowable
Bad debts must be written off before 30 June
Super contributions must be paid before 30 June and must be within the contribution caps
Small businesses can claim expenses prepaid up to 12 months in advance
Wages paid to your spouse or family members must be reasonable for the work performed
Small businesses planning major purchases or replacements of capital equipment should contact us for advice. Careful timing of those transactions can result in substantial tax savings.
Review valuations of inventory in the lead up to 30 June.
$150,000 Threshold for Depreciable Assets
Those in business with a turnover of less than $500 million can completely write-off any asset under $150,000 that is ﬁrst installed and ready to use before 30 June.
Single Touch Payroll
From 1 July 2019 all employers, no matter their size, will generally be required to comply with the STP (Single Touch Payroll) reporting obligations. Micro employers (1–4 employees) who need more time to move to Single Touch Payroll (STP) reporting can ask their registered tax or BAS agent to report on their behalf on a quarterly basis. This can continue until 30 June 2021.
Personal Income, Deductions and Tax Offsets
Subject to cash ﬂow requirements, set term deposits to mature after 1 July, rather than before 30 June.
Consider realising capital losses if you have already realised capital gains on other assets during the year. The key date for tax is contract date, not settlement date.
If you expect lower income in the next year due to retirement or any other reason, consider deferring income until after 30 June, when you will be in a lower tax bracket.
If you are a primary producer and you expect a permanent reduction in income, consider withdrawing from the income averaging system.
Arrange for deductible donations to be made before 30 June
If you plan to purchase income-producing assets, consider acquiring assets that will generate positive cash ﬂow in the name of the lower-income earner. Conversely, consider acquiring negatively geared assets in the name of the higher income earner. But please consult with us before any significant purchase to ensure that capital gains tax has been considered.
OTHER TAX PLANNING CONSIDERATIONS
Trustees of trusts should ensure that all necessary documentation is completed before 30 June to avoid a substantial tax liability.
Family discretionary trusts may need to make a family trust election if the trust has un-recouped losses, or has beneﬁciaries whose total franking credits for the year may exceed $5,000.
Be sceptical of year-end tax shelter schemes. You should not enter a scheme without advice regarding both its tax consequences and commercial viability.
Contact us for advice if you have moved to or from Australia for an extended period. You may need to review your residency status for tax purposes.
The concessional (deductible) contributions cap for 2019/20 is $25,000 for all individuals
If you have inadvertently made super contributions in excess of the maximum deductible amount (as above), or the maximum non-deductible amount, then please contact us for advice.
Non concessional contributions at $100,000. In some cases, up to $300,000 if the 3 yr bring forward rule applies. Please contact us for advice.
Carry-forward concessional contributions. You are able to carry forward your unused concessional contributions cap space amounts from 1 July 2018. The first year in which you can increase your concessional contributions cap by the amount of unused cap is 2019–20, but only if you have a total superannuation balance of less than $500,000 at the end of 30 June in the previous year. Unused amounts are available for a maximum of five years, and will expire after this.
Please email David Howells or call him on (02) 4455 5333 for further information.
Hales Douglass blog: June 30 Superannuation Tips 2020