Year End Strategies

For businesses to maximise their cash position, they should consider the following tax planning opportunities before 30 June 2024

• If aggregated turnover is <$50m, you can claim 100% deduction in the year an expense is paid.

• On 14 May 2024, as part of the 2024–25 Budget, the government announced it will continue to improve cash flow and reduce compliance costs for small businesses by extending the $20,000 instant asset write-off by a further 12 months until 30 June 2025.
• These measures are not yet law (can you believe it).
• Small businesses, with aggregated turnover of less than $10 million, will be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2025.
• The $20,000 threshold will apply on a per asset basis, so small businesses can instantly write off multiple assets.
• Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year after that.

• Loans for private purposes are not tax-deductible
• Review whether refinance options may be available to increase the split of deductible vs non-deductible debt. Please discuss this before you go ahead and refinance.
• Consider whether Div 7A loans can be restructured
• Investigate whether restructures to repayments on loans can be made, as new rules limit the deductions available against vacant land
• Pay superannuation liabilities for employees before 30 June 2024 so that you can get the deduction on your 2024 tax return

• Super is only deductible if received by your super fund by 30 June
• Annual concessional contribution caps $27,500 (unchanged for FY 2023-2024) but good news is it increases to $30,000 for FY 2024-25.
• Review whether you are eligible to utilise carry-forward of unused concessional contribution caps from prior years to further maximise your contributions. If you email us, we can provide you with a report from ATO showing how much you are eligible to contribute before 30 June 2024 to utilise unused concessional contribution caps from prior years.
• Salary earners can make concessional personal contributions as the previous restriction (10% rule) no longer applies. Concessional personal contributions means deductible to the taxpayer and receiving super fund pays 15% tax on the contributions. Please be aware, if taxpayer’s taxable income + concessional personal super contribution + investment loss is greater than $250k, then they pay extra 15% tax called as Division 293 tax which is payable by either the taxpayer or their super fund.

• Review your stock holding
• If the market value is lower than the cost of the stock, a deduction can be realised for the difference

• If debtors are not recoverable, and all action has been taken to resolve, then write off the bad debt before 30 June to bring to account the expense
• Ensure GST is adjusted

• Ensure you take advantage of capital losses within your group
• Consider whether distribution minutes can be prepared in a way to utilise group losses

• Review depreciation schedule for any scrapped plant and equipment that can be written off
• Review the effective lives of equipment and consider whether appropriate to increase rate of depreciation

• Cash repayments can reduce the requirement for dividends to be declared

• Base rate companies pay tax at 25% while all others pay tax at 30%
• Review any planning that could occur to achieve the desired tax rate (may be lower to reduce tax, may be higher to maximise franking credits on dividends)

• Review for opportunities ahead of 30 June 2024 to access any refundable franking credits
• Consider whether any loss entities could result in a flow of highly franked income resulting in a refund

• When engaged in R&D activities, clearly document the activities and costs relating to those activities to take advantage of R&D Tax Offsets

• Small businesses with an aggregated annual turnover of less than $50 million will be allowed an additional 20% tax deduction for external training courses delivered to employees by registered training providers.
• The boost applies to eligible expenditure incurred from 7:30 pm AEDT on 29 March 2022 until 30 June 2024.

• for the provision of training to employees of your business, either in-person in Australia, or online
• charged, directly or indirectly, by a registered external training provider that is not you or an associate of yours
• already deductible for your business under taxation law
• incurred within a specified period (between 7:30 pm AEDT or by legal time in the ACT on 29 March 2022 and 30 June 2024).

On 30 April 2023, the Australian Government announced it will provide businesses with an annual turnover of less than $50 million with an additional 20% deduction on spending that supports electrification and more efficient use of energy.
Eligible assets or upgrades will need to be first used or installed ready for use between 1 July 2023 and 30 June 2024. This measure is not yet law.
The measure will help small businesses make investments like:

• electrifying their heating and cooling systems
• upgrading to more efficient fridges and induction cooktops
• installing batteries and heat pumps.
• Computers, laptops (which most of the new purchases will qualify)
• Industry specific assets including an electric pump, electric tools (drill, saw, pruning tool, welder), assets with an electric motor, electric fence on a farm, electrical infrastructure assets, electric roller door, electric gates
• Battery that stores electricity

Up to $100,000 of total expenditure will be eligible for the incentive, with the maximum bonus tax deduction being $20,000 per business.
Following are some examples of purchases which will not qualify for above incentive:
Motor cars, solar panels, building and structural improvements, solar hot water system with a gas booster.

• Understand options to reduce or defer tax payments
• Plan the cashflow for instalments of tax, and the tax due on lodgements of tax returns
• Identify opportunities to vary tax instalments and improve cashflow
• Implement above tax planning and other savings