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Yes, it’s nearly that time of year again—End of Financial Year. I know, I can hear the collective groan from here. But if there is any time of the year that you should pay a little extra attention to your business finances it’s now. There is still time to take advantage of the following measures to optimise your tax position and have your business ready for next year.

Here are our Top 7 Tax Tips for the 2019/2020 end of financial year preparations. Using these tips wherever possible has the potential to save you thousands.

1. Instant Asset Write Off

Instead of having to depreciate the assets you purchase for your business you can now write these items off instantly. The threshold amount has risen to a whopping $150,000 for each asset.

Business assets that are eligible for instant tax write off and include things like office furniture; building and gardening equipment; computers, tablets and printers; and even vehicles. With the recession and the downturn in consumer spending as a result of COVID-19, there are some excellent deals to be had, particularly for vehicle purchases.

For those seeking financing for purchases, unsecured business loans or cashflow and debtor funding, TLA Service Member, Designer Financial Services, may be the right choice for your business. They can present a range of financial options to suit your business circumstances. Call 1300 312 749 or visit their website: www.designerfinancialservices.com.au to learn more.

The ATO eligibility criteria for businesses and asset items have changed over time so it is important that your check these conditions before making your purchase. To learn more about your business’ eligibility, the asset thresholds, exclusions and limits, the later sale or disposal of assets or to calculate your deduction, visit this ATO website link.

2. Tax Deductible Items

You can claim a tax deduction for most of the expenses from carrying on your business, as long as they are directly related to earning your assessable income. There are many different types of expenses you can claim so make sure you consider costs such as motor vehicle expenses, home-based business expenses, business travel, salaries, wages and superannuation contributions, repairs, maintenance and replacement expenses, and operating expenses.

Remember, if an expense is partly for business and partly for private use, you can still claim the business portion of the expense related directly to the functioning of your business.

To learn more about tax deductible expenses and the rules governing your claim, visit this ATO link or contact your taxation agent/accountant.

3. Voluntary Superannuation Contributions

While it is a bit late in the financial year to be considering salary sacrificing for superannuation contribution, now might be the time to think about that option for next financial year.

It is, however, not too late to contribute a lump sum payment to your superannuation fund this financial year. Most individuals, regardless of their employment arrangements, will be able to claim a full deduction for personal super contributions they make to their super until they turn 75. For those aged 65-74 there is a work test and a work exemption test that must be passed for eligibility.

Voluntary super contribution is an excellent way to plan for retirement and is highly encouraged by the government through a range of measures designed to financially benefit individuals who do so.

Caps apply to amount of tax-deductable funds that may contributed in one financial year. Individuals contributing to an externally managed, recognised superannuation scheme may put in up to $25,000 of their pre-tax earnings and up to $100,000 of their post-tax earnings.

Depending on your current superannuation balance, you may be able to make further contributions other than the ones above. For example, you may also be able to contribute the unused portion of last year’s contribution allowance (up to $25,000) as a catch-up payment.

If you intend to make a lump sum contribution you should do so as soon as possible. Funds are extremely busy at this time of year. The funds must be received by June 30, 2020 to be eligible and you must have submitted a Notice of Intent to Claim or Vary a Deduction for Personal Super Contributions form to your super fund and receive an acknowledgement that the form has been lodged. Without this form, you will not be able to claim the deduction.

To learn more about deductable superannuation contributions, visit this ATO link or contact your taxation agent/accountant.

Please note: Different rules apply to individuals with self-managed super funds. Please seek alternative financial advice.

4. Know Your Obligations Under the JobKeeper Wage Subsidy

At present, The JobKeeper package is paying eligible employees, through their employer, $1500 per fortnight to remain on the payroll. This payment is taxable for employees so all PAYG payment summaries must be prepared as normal, including the JobKeeper payments. For Businesses, however, the payment can be deducted when paying employees to ensure there is no net tax effect at the end of the financial year.

5. Claiming Prepaid Expenses

A prepaid expense is a cost you incur under an agreement for something to be done (in whole or in part) in a later income year. Generally, a prepaid expense is deductible over the eligible service period (up to 10 years).

If your business turns over less than $10m per year, you will be eligible to deduct prepayments immediately (if the eligible service period is 12 months or less).

  • Those businesses that turn over more than $10m per year will be able to deduct prepaid expenses immediately if they satisfy the following criteria:
  • They are for ‘excluded expenditure’
  • The ’12-month rule’ applies
  • They relate to a pre-RBT (Review of Business Taxation) obligation.

To learn more about claiming pre-paid expenses and the applicable rules and criteria, visit this ATO link.

6. Tax Relief Measures

The State Government is offering tax assistance measures to business owners impacted by the COVID-19 crisis. Depending on your State, you may be able to defer payroll or land tax payments and receive a reduction in land tax.

To learn more about the available measures, visit these links:

7. Meet with your accountant before the end of the financial year

There may be other deductions that your business is eligible for so it is an excellent idea to meet with your accountant as soon as possible. Now is also an excellent time to put in place arrangements that will benefit your business in the next financial year and optimise your tax position for this financial year.

Time is running out so make sure you don’t miss out on all that you and your business are entitled to. Remember, June 30 2020 is the end of the financial year so act now.

Disclaimer: The information provided in this article is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information in this article you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.

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