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Published on June 6, 2019. Published by R J Sanderson And Associates Pty Ltd.

With the end of the financial year approaching, it’s a great time to make smart decisions about your finances. Taking action before 30 June can open up more opportunities for you. We know that there isn’t a one-size-fits-all solution to accounting, wealth management and business growth. So we’ve outlined some tax-effective strategies that you may benefit from. We can help you find what strategies are right for you and/or your business.

Business Tax Tips

Strategies for business

Single Touch Payroll

Single Touch Payroll
Applies to all employers from 1 July 2019 – estimated to bring 700,000 businesses into the regime.
Transition period – 1 July to 30 September 2019 where no penalties will be imposed.
Real time reporting of payroll details e.g. super to the ATO –available to employees via myGov.

Superannuation (SGC) Amnesty
This announcement was not passed by Parliament and the clock runs out on 24 May 2019.

Payment to workers
No deduction if the business does not meet its PAYG withholding obligations.
Applies to salary, wages, commissions, bonuses paid to employees.
Also applies to payments for supply of services where a contractor has not provided their ABN.

Audit activity is on the rise
Cash businesses are a major focus.
Be aware of information sharing and matching between government and non-government institutions.
Bench marking of businesses continues and more industries are being added.
Consider taking out audit insurance – it’s not only deductible but can cover cost of defense in the event of a claim.

Instant asset write-off
$25,000 – 29 Jan 2019 to 2 Apr 2019
$30,000 – 2 Apr 2019 to 30 Jun 2020

Available to businesses with a turnover of up to $10 million. Items costing more will be subject to the depreciation rules.

Motor vehicles

Motor vehicles
The depreciation limit for 2019 FY is $57,581 – it applies to both the depreciation as well as the GST credits claimable.

Using the Ute to avoid FBT
This area is receiving high amount of ATO attention.
Watch the second condition of the exemption rules.
“Private use” is the ATO focus – home to work travel and private trips (limit to length per trip and total per annum).

Director fees and/or bonuses
assessed until it is actually paid, effectively dropping it into 2020 FY.

Delay the receipt of income
When accounting for income on a cash basis, delaying receipt until after 30 June will delay tax liability by a full tax year.
For those on accruals – it is important to hold back issuing of invoices for this to work.

If accounting on a cash basis… Make sure to pay creditors by 30 June
If cash flow allows, ensure creditor accounts are paid before 30 June to maximize deductions.
Remember – the 12 month rule will apply to prepayments – i.e. registrations, insurances and subscriptions.
Amounts under $1,000 are excluded from 12 month rule.

Re-structure to a corporate entity
Consider a restructure form a trust to a corporate entity to take advantage of a flat company tax rate.
Companies with a turnover of $50 mil or less will be taxed at 27.5{89774503f1dc5a8067a215bf11c503ad6eecdd9fbdfb7beae4875fba6258e357} in 2019 FY (proposed to drop to 25{89774503f1dc5a8067a215bf11c503ad6eecdd9fbdfb7beae4875fba6258e357} by 2021/22).

Introduce a corporate beneficiary to a discretionary trust
If a re-structure is not feasible, consider making a distribution to a company and maximize tax at 30{89774503f1dc5a8067a215bf11c503ad6eecdd9fbdfb7beae4875fba6258e357}.
Good strategy for families with beneficiaries that are close to turning 18 years of age.