Maximise your tax deductions for the 2020-21 financial year by planning and reviewing your records.
Here are some top tips for businesses when it comes to year-end tax planning:
Pay quarterly super
Super Guarantee (SG) contributions must be paid by 30 June 2021 to qualify for a tax deduction in the 2020-21 financial year. The fund must receive these contributions by 30th June. Some clearing houses can take more than a week to submit the payment to the super fund. Always ensure that superannuation is paid before June 20th.
Review capital expenditure
This financial year, the instant asset write-off allows eligible businesses to instantly deduct any amount spent on assets in their upcoming tax return. Remember only to buy items that are needed and not spend money on others to claim a tax deduction.
Small business CGTconcessions
Individuals operating a small business may be eligible for capital gains tax (CGT) concessions on the sale of business assets. The small business CGT concessions are available to business taxpayers with an aggregated turnover of less than $2 million or on business assets less than $6 million. If a business you own has sold or you are thinking of selling, speak with us as soon as possible.
Stocktake
Obsolete, slow-moving or damaged stock should be identified by 30 June and disposed of for income purposes to receive a deduction. You should minimise the amount of stock on hand at year end.
Contact the ATO
The ATO is responsive to businesses struggling to keep on top of their tax obligations due to COVID-19. Businesses struggling to meet their tax obligations should contact the ATO to discuss deferring payments, make variations to PAYG quarterly tax instalments, or change their GST reporting cycle from quarterly to monthly to receive quicker access to GST refunds.
Defer income
Businesses may wish to delay tax payments on assessable income this financial year by deferring invoices until after 30 June. Income from the payments won’t be taxed until the following financial year.
Family Trusts
Remember that family trusts must decide who is receiving the trust’s income and capital before June 30th. These days with digital signing, accountants must work through the family trust to ensure that they know how to distribute the income before June 30th.
Bad Debts
Bad debts are a significant cost to all businesses that sell on credit. There is no sense in paying tax and GST on sales where payment will not be received, so reviewing any bad debts before the end of the year is important. The rules around claiming a tax deduction for bad debts are complicated, so speak with us if you believe you have debts that can be written off.
We are here to help.
Make use of us! This guide is merely a starting point, designed to help you identify areas that might have a significant impact on your business planning.
We are happy to discuss your situation and advise in any way we can, contact us.
