by Chad Nean
30 June is approaching fast.
As always, at this time of the year timing is important and the time to act is now.
Below is a guide on some of the main things to be aware of this tax time for yourself and your business.
Our Top Tax Tips
Pay June quarter employee super contributions now
Pay June quarter super contributions this financial year if you want to claim a tax deduction in the current year. The next quarterly superannuation guarantee payment is due on 28 July 2022. However you may choose to make the payment early to bring forward the tax deduction instead of waiting another 12 months.
There are cutoffs with super clearing accounts to be aware of so it’s best to act on this immediately.
Don’t forget about yourself! The 2022 super concessional contribution rate is $27,500. Individuals are able to make personal concessional contributions from pre-tax funds to claim a tax deduction for 2022. This is a great way for an additional tax deduction and also to build wealth and can help offset untaxed income you may have from investment income or capital gains. There is also the possibility to catch up contribution limits in prior years in some circumstances. Please contact us to discuss this area.
Temporary full expensing / Instant Asset Write Off to be extended to 30 June 2023
Temporary full expensing enables your business to fully expense the cost of the following in the first year of use:
- New depreciable assets
- Improvements to existing eligible assets
- Second hand assets.
Small business entities (with aggregated annual turnover of less than $10 million) using the simplified depreciation rules under pooling can deduct the full balance of their simplified depreciation general pool at the end of the income year while full expensing applies.
Write-off bad debts
To be a bad debt, you need to have brought the income to account as assessable income and given up all attempts to recover the debt. It needs to be written off your debtors’ ledger by 30 June.
For tax purposes, businesses that trade stock are required to complete an annual stocktake as at the 30 June. It’s important that you complete this in a reliable and efficient manner to ensure accuracy. As part of the stocktake, you should identify any old, obsolete or damaged stock that can be written off for these purposes.
Small businesses are allowed to claim a full deduction for prepayments when paid off up to 12 months. Such prepayments as rent, insurance and leases could be paid prior to 30 June and be fully deductible.
Realise any capital losses and reduce gains
It’s beneficial to look to see if you can reduce the tax effect of any capital gains you have made during the year by realising any capital losses – that is, sell the asset and lock in the capital loss. These need to be genuine transactions to be effective for tax purposes so please keep this in mind but it’s important that this is reviewed with your personal circumstances.
Other Things To Consider
The Superannuation Guarantee (SG) rate will rise from 10% to 10.5% on 1 July 2022 and will then steadily increase by 0.5% each year until it reaches 12% on 1 July 2025.
It’s a good idea to check also that your payroll software incorporates the change in the Super rate to commence the new financial year. It worth reviewing this as part of your new payroll year.
Don’t forget about finalising your single touch payroll for the 2022 period. A final declaration of the payroll generally needs to be made by the 14th July 2022.
What Is On The Tax Office’s Radar?
The ATO has been very active lately and indicated that they will continue to review cryptocurrency transactions.
Each cryptocurrency is a separate asset for capital gain purposes. As such, there will be a capital gain event once you dispose of any cryptocurrency, even if you are just shifting your focus from one specific type to another. So please be aware of this.
Work from home expenses
It’s important to be mindful of what you can and cannot claim regarding working from home. The ATO has indicated they will be reviewing this carefully with the large increase in deductions in this area.
How We Can Help
For assistance with your personal and/or business taxation matters, please get in touch with our accounting team below or call (02) 4969 6600.