2019 End of Year Tax Planning

Now is the time for taxpayers to consider their current tax positions to see if there are steps they can take to minimise their tax liability prior to 30 June.

We have outlined below some of the main tax planning ideas that you can consider.

$30,000 instant asset write-off for businesses

The instant asset write-off threshold for businesses has increased to $30,000. There are different eligibility criteria and write-off thresholds throughout the 2019 financial year. We have summarised these criteria here. If you want to take advantage of the instant asset write-off, you will need to make sure you acquire the asset prior to 30 June.

Employee superannuation

The June quarter superannuation guarantee liability is required to be paid by 28 July. However, a business can only claim a tax deduction for employees superannuation when it is actually paid. As such, to ensure you get the deduction in the current year, we recommend that you pay your employees’ June superannuation guarantee liability prior to 30 June (cashflow permitting). We recommend that the payment be made by 20 June (to ensure it is processed by the recipient superfund). If you use the ATO’s superannuation clearing house, they have recommended paying no later than 24 June.

Personal superannuation

You may also want to make personal contributions to super. For the 2018/19 financial year, the maximum concessional (deducted) contribution is $25,000.

Please call us if you are considering making personal contributions superannuation to check whether:

(a) you can claim a tax deduction for making personal contributions

(b) how much you may be able to claim as a deduction

(c) whether it is tax effective for you to make the personal contribution

(d) what process needs to be followed in order to make the contribution

You also need to consider whether making a contribution fits within your overall financial plan as advised by your financial advisor.

Trade debtors

You should review your trade debtors as at 30 June. You must ensure that any debts that are uncollectable are written off prior to 30 June in order to claim a tax deduction for the write-off in the current financial year.

Prepay or bring forward your expenses

Make sure you review all of your expenses and bring forward any expenses to June (where possible). For example, stock up on stationery and office consumables, prepay your insurance and interest (if applicable) and look at any other expenses you may be able to pay in June. By bringing these expenses forward to June, you are obtaining a tax deduction in the current financial year which will reduce your overall tax bill for the 2019 year.

Defer assessable income

Consider whether it is possible to defer the derivation of your assessable income (being mindful of cashflow implications).

Motor vehicles

If you are using a vehicle for a high percentage of work-related travel, make sure you keep a logbook. Without a logbook, an individual is limited to claiming a maximum of 5,000km at $0.66 (or $3,300). If you keep a logbook, you can claim the business percentage of the operating costs of the vehicle (petrol, registration, servicing, depreciation, interest etc).

Rental properties

If you have a rental property, we wrote a blog post for Affinity Electrical outlining some of the main end of year considerations for rental properties. You can access the blog post here.

If you would like to discuss end of year tax planning for your personal situation, please call us on (07) 56656469.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent,

Jeanette Lingard

Jeanette has over 20 years experience as an accountant in public practice. She is a Chartered Accountant, registered tax agent and accredited SMSF Association advisor. When she is not helping business owners grow their empires, you will likely find her out running on the trails or at the gym. Book in to see Jeanette today.

Instant asset write-off

There have been some significant changes to the instant asset write-off over the past few months. Below we have summarised the eligibility criteria and the write-off threshold for the 2019 year:

If you would like to discuss how your business can make the most the of the instant asset write-off, please call us on (07) 56656469.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent,

Jeanette Lingard

Jeanette has over 20 years experience as an accountant in public practice. She is a Chartered Accountant, registered tax agent and accredited SMSF Association advisor. When she is not helping business owners grow their empires, you will likely find her out running on the trails or at the gym. Book in to see Jeanette today.

Federal Budget 2019-20

Last night Federal Treasurer Josh Frydenberg had his turn at the wheel and handed down his first Federal Budget.

So what did we like in the Budget? We liked that there were no new taxes or increases to tax rates. We liked the proposed bring forward of the reduction to the company tax rate. We also like the increased threshold of the instant asset write-off to $30,000 and the expansion of the write-off to apply to more businesses. The proposed income tax cuts are also welcomed and may help relieve some family financial stress.

We’ve outlined below some of the main tax and other business measures that were announced in the Budget.

As with all budgetary measures, these measures are not final until the relevant legislation has been passed by the Government. As such, it is important that you use caution in acting on these measures until they have become law. We will keep you updated on the status of these proposed measures.

Businesses

Instant Asset Write-off – The instant asset write-off will be increased to $30,000 for assets that are acquired between 2 April 2019 and 30 June 2020. More businesses will also be able to access the write-off with the turnover eligibility increasing from $10 million to $50 million. We note that there is currently legislation before Parliament to increase the current asset write-off threshold from $20,000 to $25,000 to take effect from 29 January 2019, once passed. As such, if all of the relevant legislation is passed to implement the increased thresholds, the instant asset write-off will be available as follows

Corporate Tax Rates – From 1 July 2021, businesses operating in a company structure with a turnover of less than $50 million will have their tax rate lowered to 25% (this is 5 years earlier than original planned).
ABN integrity measures – The Government will look to strengthen the ABN system by requiring ABN holders to lodge their income tax returns and verify their details on the Australian Business Register annually.

Individuals

The Government has gone back to their seven-year personal income tax plan (announced in the 2018-19 budget) and made changes and updates as detailed below:

Seven year personal income tax plan
- Step one – Tax Offset: A low and middle income tax offset will apply from 1 July 2018 to 30 June 2022. The offset will give taxpayers back up to an extra $1,080 if they earn less than $90,000. The offset then reduces and is completely phased out at $126,000 taxable income. This offset will exist in addition to the Low Income Tax Offset.
- Step two – Tax Rates: From 1 July 2022, the 19% tax bracket will increase from $37,000 to $45,000. The low income tax offset will be raised to $700.
- Step three – Simpler System: From 1 July 2024, the 32.5% marginal rate will be decreased to 30%. A summary table of the new tax rates is below:

Superannuation

The superannuation sector remains largely unchanged in the Budget. The main changes are:

Work test – From 1 July 2020, it is proposed that people aged 65-66 will be able to make voluntary contributions to super without having to meet the work test. Currently, people over 65 must work a minimum of 40 hours over a 30 day period in order to make a contribution.
3 year bring forward for non-concessional contributions – People aged 65 and 66 will also be able to access the 3 year bring forward provisions to make 3 years worth of non-concessional contributions to their super in a single year.

We will keep you up-to-date with the progress of the implementation of these proposed measures.

If you would like to discuss the tax implications of the budget proposals, please call us on (07) 56656469.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent,

Jeanette Lingard

Jeanette has over 20 years experience as an accountant in public practice. She is a Chartered Accountant, registered tax agent and accredited SMSF Association advisor. When she is not helping business owners grow their empires, you will likely find her out running on the trails or at the gym. Book in to see Jeanette today.

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Jeanette Lingard

Jeanette has over 20 years experience as an accountant in public practice. She is a Chartered Accountant, registered tax agent and accredited SMSF Association advisor. When she is not helping business owners grow their empires, you will likely find her out running on the trails or at the gym. Book in to see Jeanette today.