TAX PLANNING - 8 HOT TIPS
Superannuation
This not only relates to individuals making sure they have topped up the concessional contributions CAP ($25,000). But we also have the opportunity this year to top up from the previous year. We also recommend all business pay their Superannuation for employees prior to 30 June to make sure that you receive the tax deduction. If you haven’t paid the super, you cannot claim the deduction. Please note: to claim a personal tax deduction the fund has to have received the funds by 30th June, not making payment on 30th June so if you are paying superannuation this should occur this week.
Small Business Reporting
If you are a small business you may be reporting on a cash or accruals basis. You need to take note of this, if you are reporting on a cash basis make sure you have paid all you bills pre 30 June as you will not receive a tax deduction for them. We also have the change to Depreciation rules, with any assets purchased after 12th March 2020 less than $150,000 immediately deducted. This rule also applies to you small business pools, therefore there may be some big benefits this year but your later years can be effected.
Individuals - Home Office Expenses
If you were like a lot of us working from home, the ATO has launched a short cut method that can be applied from March 1 2020 to June 30 2020. Basically this means that you can claim 80 cents for each hour you work from home. This way you only need to track hours worked at home and not household costs percentage use which can have effects on capital gains down the track. Keep your receipts; if you are unsure whether something is deductible, it is better to keep that information and ask us. We cannot claim for things we do not know about!
Superannuation Pensions
If you are at a certain age you may be able to access your superannuation and these payments could be tax free. This can either assist with cashflow to reduce debts, assist with living expenses or you may be able to put the funds back into superannuation and claim a tax deduction. Please ensure you seek financial advice before implementing any strategies associated with your superannuation.
Capital Gains
Note a capital gain is based on the date you sign a contract not settlement date. Therefore if you have a property subject to capital gains settling in July 2020 we suggest you seek advice now of ways to reduce this tax as the income will be included in your 2020 income tax return.
Stock Take
Doing a proper stock take as at 30th June can assist us in advising you how your business has performed during the year but can also be used to reduce your tax position for tax purposes. Its not the most exciting thing to do in business but having a true indication of your business performance is vital in being able to plan and provide you with opportunities.
HECS-HELP
If you have a HECS-HELP debt ensure you completed the TFN Declaration correctly with your employer stating you have this loan. This will ensure your employer knows to take out extra tax to cover the compulsory repayments required (as the income thresholds have reduced and you are required to repay this earlier than previously).
Tax Deductions
A tax deduction reduces your taxable income and is not dollar for dollar for money spent vs tax savings. Don’t spend purely for the sake of a tax deduction!