Updated: Apr 13
Well it's that time of year again where we become obsessed with maximising our tax deductions prior to year end. Take us back 50 years ago and tax planning allowed a little more creativity, however the taxman-ian devil (aka the ATO) and that pesky thing called tax legislation has nipped quite a few strategies in the bud, but do not fear as there are still things that can be done to keep your tax to a minimum (within the intent of the law of course).
Some things we want to highlight first:
You shouldn't make business and investment decisions based on tax alone. The decisions need to align to your why and purpose and fit your goals and plans, ie, don't just buy or invest into something for a tax benefit.
The structure you conduct your business affairs within is the ultimate tax planning strategy as it ensures you are only paying your fair share of tax. We are always here to help with your tax structuring and have some tax masters in our ranks at the ready.
Some tax planning relates to timing benefits, ie bringing forward the tax deduction or deferring income where possible OR tax deductions where CASH needs to have been spent.
We cannot create tax deductions out of thin air as our magician certificates haven't arrived in the post yet and knowing snail mail may never arrive, ie we can't just claim the maximum😉
So here are our TOP TEN tax planning tips and tricks (say that a few times in a row, haha):
Defer income, ie, delay invoicing where possible
Addback unearned income, ie, income invoiced in advance but services not yet performed
Review debtors (people that owe you money) and write off those that are not recoverable, ie, they've gone bad (like a prawn in the sun)
Review stock and write off obsolete items. Remember to do a stocktake at 30 June - pretty please!
Prepay expenses ... amounts of less than $1,000 OR if you are an individual taxpayer not operating a business or small business entity (turnover < $50m) you can claim a tax deduction for 12 months of prepaid expenses.
Maximise your superannuation contributions BEFORE 30 June (it needs to be physically paid). The maximum concessional contribution in the 2022 year is $27,500. You can also carry forward any unused concessional contributions from prior years to tip in a bit extra if your total super balance is <$500,000. Woohoo!
Purchase plant and equipment. You can claim 100% of the cost of eligible depreciating assets under temporary full expensing (if turnover <$5 billion - think we are pretty safe there) up to 30 June 2023 - we have no word yet as to what it will look in 2024 so if you need to purchase any plant & equipment we recommend you do it before 30 June 2023 (you also need to have it in your hot little hand by 30 June in order to claim it). Word of warning: If you are looking at purchasing a motor vehicle your tax deduction will be reduced by the private use component and there is a car cost limit of $60,733. You might want to take a look at our blog on what you can claim for motor vehicles to get more deets on this one https://www.allinadvisory.com.au/post/motor-vehicle-so-what-can-i-claim and not rely solely on the sales pitch from your salesman. 😉
Maximise your home office claim (because let's face it the post Covid world has normalised this one). There are a few different methods that you can use and wouldn't you know it we have a blog on that too that you can check out here https://www.allinadvisory.com.au/post/i-worked-from-home-last-year-what-can-i-claim
Want $500 smackers from the Government? If you earn < $56,112 and you make a personal (after-tax) contribution into your Super you may be eligible for a super co-contribution, where the government contributes $0.50 for every $1 you contribute to super, up to a maximum of $500 ... a bit like a finding a pineapple in your pocket.
Made a loss this year and paid tax in the 2021 to 2022 income years? then this pearler is potentially for you. You can carry back the tax loss to the year there was an income tax liability and get a refund, woohoo for you! but sucks you had losses.
There were also some nice little surprises announced in the 2022 Federal Budget (which PS is yet to be legislated -STILL! we know we know️🤦♀️) which are:
💲Small Business Tech Investment Boost a 120% tax deduction for expenses and depreciating assets to support digital adoption (YAY!!! we are ALL IN to that!) capped at $100,000 p.a. (this might include cyber security systems, cloud based service subscriptions or portable payment devices). Available until 30/6/23 for small businesses with <$50m aggregated turnover (note for 29 March to 30 June 2022 expenditure the deduction will be claimed in the 2023 year)
💲Small Business Skills & Training Boost a 120% tax deduction of the cost of eligible courses to train new employees, or to upskill existing employees. Must be for Aussie employees and delivered by entities registered in Australia. Available until 30/6/24 for small business <$50m aggregated turnover (note for 29 March to 30 June 2022 expenditure the deduction will be claimed in the 2023 year)
Phew this is one epic blog and yep this is more ... There have been changes announced recently relating to trust distributions and beneficiaries which will impact year end distributions as the taxman-ian devil is cracking down on trust distributions to kids, yes we know we know, it's hard to keep up. Here is a really easy to understand vid you can watch which explains it better than we ever could https://www.youtube.com/watch?v=m4Jbk7dsWGw (thanks tax nuggets academy). We will be working through these scenarios with you if it impacts you.
So there you go, your tax planning in a really big nutshell.
If you have got to the end, high 5's and congratulations! hope it hasn't been too much of a taxing read, haha. 🤣 Thank goodness you have some award winning accountants in your corner to look after all of this for you. We do highly recommend that you make an appointment to meet with us to run through your tax planning in mid May or early June to ensure you are doing everything possible pre 30 June, as it's too late after, trust us! and to make it super easy here is the handy link for you https://www.allinadvisory.com.au/free-consult. Well that's as good as it nets, calc-u-later!
Disclaimer: This blog is for general informational purposes only. For advice on your specific situation, please contact a tax professional, ie us 😊