The Essential 30 June Guide
For You
Opportunities The end of the financial year is coming soon. Here are ways to get ready for the 1 July 2024 tax cuts:
- Prepay your deductible expenses for this year.
- Make any deductible super contributions.
- Plan any donations to take advantage of the higher tax rate.
Boosting Super Want to grow your super? If your total balance allows it, make a one-off deductible contribution. You can use up to a $27,500 cap, including employer super payments, salary sacrifice, and personal contributions.
If your super balance was below $500,000 on 30 June 2023, you might use unused cap amounts from the last five years. For example, if you were $8,000 under the cap each year, you could add $40,000 more this year.
To make a deductible super contribution, you must:
- Be under 75.
- Lodge a notice of intent to claim a deduction.
- Get an acknowledgement from your fund before filing your tax return. If you are 67-75, you must also meet the work test (40 hours in a 30-day period).
If your spouse’s income is less than $37,000, you can contribute to their super and claim a $540 tax offset.
Have a tax bill? Making a larger personal super contribution can help offset it.
Charitable Donations Donating to a registered deductible gift recipient (DGR) can be deducted from your taxes for amounts over $2. The more tax you pay, the more valuable the deduction.
To be deductible, donations must be gifts, not in exchange for something. Special rules apply for charity auctions and events.
You can also give to public or private ancillary funds for immediate deductions. These funds manage the money over time and distribute it to DGRs each year.
Investment Property Owners A depreciation schedule helps calculate deductions for wear and tear on your property. It can help maximise your deductions.
Risks
Work from Home Expenses You can claim certain expenses for working from home, but this is an ATO focus area.
Two methods to claim:
- Shortcut Method: 67c per hour for energy, internet, phone, and stationery. Keep records of work hours.
- Actual Method: Claim actual expenses above normal costs. Keep copies of expenses and a work diary for at least 4 continuous weeks.
Landlords Beware To claim expenses for an investment property, it must be rented or available for rent. The ATO is focusing on claims for properties used by family or friends or listed at unreasonable rates, especially in holiday spots.
Key ATO focus areas:
- Loans: Only claim interest on amounts used for the rental property. Apportion the loan if part is used for personal expenses.
- Repairs vs. Capital Improvements: Repairs can be claimed immediately; capital improvements are deducted over time. Repairs must relate to rental wear and tear, not purchase repairs.
- Co-owned Property: Claim income and expenses according to your legal ownership. Joint tenants claim 50%; tenants in common claim based on ownership percentage.
- Gig Economy Income: Declare all income from platforms like Airbnb, Uber, and YouTube. Income is taxable when credited to your account, not when withdrawn. Platforms must report transactions to the ATO, so undeclared income will be found.
If you have any undeclared income, report it now to avoid penalties and interest.
For Your Business
Opportunities
Bonus Deductions There are bonus deductions available for small businesses in 2023-24. These include the instant asset write-off, energy incentive, and the skills and training boost.
Instant Asset Write-Off Announced in the 2023-24 Federal Budget, small businesses with less than $10 million turnover can immediately deduct the full cost of eligible assets costing less than $20,000. This measure is extended to 30 June 2025. Without this, the write-off threshold would be $1,000. However, the law has not yet passed due to disagreements in Parliament.
Energy Incentive The $20,000 energy incentive provides an extra 20% deduction on eligible asset costs or improvements that support energy efficiency in 2023-24. This measure is also pending Parliament approval. If it passes, assets must be used or installed between 1 July 2023 and 30 June 2024.
Skills and Training Boost The bonus 20% deduction for employee training is certain. This boost is available to businesses with less than $50 million turnover. The training must be from a registered provider and paid for between 29 March 2022 and 30 June 2024.
Write-Off Bad Debts If a customer won’t pay, write off the debt by 30 June. Document the bad debt in your debtor’s ledger or with a minute.
Obsolete Plant & Equipment Scrap and write off any obsolete plant and equipment on your depreciation schedule before 30 June.
For Companies Bring forward tax deductions by committing to directors’ fees and employee bonuses (by resolution), and pay June quarter super contributions in June.
Risks
Tax Debt and Reporting Obligations Not lodging returns is a major red flag for the ATO. They can issue an assessment of what they think your business owes. If your business is struggling with tax or reporting, we can help by working with the ATO on your behalf.
Professional Firm Profits The ATO is reviewing how profits flow through professional services firms. They are checking if structures are in place to reduce tax. If professionals are not properly rewarded for their services, the ATO may take action.
Need support or have questions? Talk to us today about maximising your outcomes and reducing your risks.
