Tax Tips for the End of the Financial Year

A Year Like No Other

There’s been a raft of government stimulus programs released to help Australian businesses cope with the COVID-19 health pandemic, and there’s never a more important time to make sure you have the correct lodgement information in place.

Sue Liebert from BridgePoint Group provides top tips to ensure your compliance is in line with Government regulations.

Top Tax Tips

1.Pay Shareholder Loan Accounts and Dividends

The Australian Taxation Office (ATO) has stringent guidelines in place. Failure to comply can lead to severe outcomes. It is critical to seek expert advice to avoid these penalties.

2.Employee Bonuses and Directors’ fees

Payments or commitment to payments need to be included in your year-end numbers. Payments to be made after 30 June 2020 need to be advised to employees and directors, and included in advice to the ATO

3. Bad Debt Write Offs

Once the collections process has finished and the debt remains outstanding, it can be written off. With the changes to recovering debts criteria released as part of the Government stimulus package, it’s critical to get advice to make sure you have complied with those changes before writing off a bad debt. Your debtors’ ledger must reflect the write off or at least a directors minute confirming the debts position.

To avoid a misrepresentation, seek clarity from an expert in the field.

4. Obsolete Plant Equipment? Consider writing it off

Rather than depreciating an obsolete piece of equipment, there are benefits in writing it off. It’s timely to review items on your depreciation schedule. Now is the time to review and write off before 30 June.

5. Pay it forward – Bring forward repairs, consumables, trade gifts or donations

If you have deductions such as repairs, donations, consumables, or trade gifts, consider paying for them before 30 June.

6. Employee super contributions

Payments for June quarter super contributions can be deductible if payments are made before 30 June 2020. Employers that choose early payment are able to claim the tax deduction in this financial year, rather than waiting 12 months for the deduction.

It is important to make sure your super contributions are up to date ensuring your own long-term wealth is kept on track.

7. Neutralise capital losses

Capital gains transactions versus capital losses is a way to offset tax effects caused by capital gains. This can be achieved by selling an asset at a loss and claiming it as a capital loss.

There is a risk involved in ascertaining if an asset is a loss or if there are other ways to keep the asset. These are complex reporting items and should be overseen by tax experts.

8. Management fees

Make sure charges have been raised by 30 June. This relates between cross entity relationships. Charges need to be commercially reasonable and fully documented.  The ATO has indicated this is an area coming under heightened scrutiny.

It makes sense that if the ATO is scrutinising management fees, both locally and internationally, that you seek expert advice.

9. Accelerated Depreciation Deductions and Instant Asset Write Off

The threshold for instant asset write off has increased from $ 30,000 to $ 150,000, and now more businesses can access this measure (up to a turnover of $500 million). There are important  dates to consider, and these rules may not apply after 30 June 2020, so if you are considering investing in depreciable assets in the near future, talk to us about how these concessions may apply to you.

The preparation you do in the coming weeks can save you money, time and penalties. BridgePoint Group is able to ensure your business has completed the regulatory requirements before end of financial year. Contact Sue Liebert at BridgePoint Group for expert tax advice now so you’re ready for the end of this financial year.