Tax Planning Strategies for 2021-2022 Financial year

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R J Sanderson Pty Ltd
June 20, 2022
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You have Questions, We have Answers.

What financial opportunities may be available before and after 30 June? How do the financially successful prepare for the end of financial year?

As the end of another tax year rapidly approaches on 30 June, we’ve put together an End of Financial Year tax planning tips to help you maximise tax time benefits.

Tax Strategies for Individuals

1. Additional super fund contributions

  • Maximum: $27,500 annual cap
  • Contribution deadline: 30 June

2. Superannuation carry forward (for unused concessional contributions):

3. Potentially increase your super contribution:

4. Claim offset for spousal contributions:

  • $540 offset available for claim
  • $3,000 minimum super contribution
  • Spouse income under $37,000: Full rebate
  • Spouse income over $40,000: Nil rebate

5. Government co-contribution:

  • Applies to low-income earners
  • Make after-tax contribution to super to qualify
  • $500 for deposit of $1,000
  • Income threshold applies:
  • $42,112: $500 contribution
  • $56,112: Nil

6. Donate to charitable organisations:

  • Organisation must have DGR (deductible gift recipient status)

7. Salary sacrifice (varies by occupation):

  • Laptop/computer/iPad/PDA
  • Tools of trade
  • Subscriptions, etc
  • Associated car leases

8. KM’s travelled:

  • Work-related only
  • Excludes travel between home and work
  • Keep a diary or logbook

9. Home office expenses:

  • Diary showing hours worked from home
  • Log should be for at least one month
  • Claim rate depends on other expenses

10. Income protection

  • Tax deduction available on income protection insurance

11. Investments

  • Tool for wealth creation and tax offset
  • Longer-term strategy
  • Requires detailed planning and analysis
  • Our experts can assist

12. Trust Distributions

  • With advent of s100a, there are certain restrictions in Trust Distributions to beneficiaries who have just turned 18 years old

Tax Strategies for Businesses

13. Defer Income

  • Invoices issued in June will be taxable income even if paid in July

14. Bring Forward Expenses

  • By making payments before 30 June

15. Write Off Bad Debts

  • Before 30 June for any debt that is considered non-recoverable

16. Carry Out a Stock take

  • So you can write off stock on 30 June

17. Director / Owner payments - Accrue / Pay Directors an additional wage

  • This should be entered via payroll. SGC will also be payable on this additional amount

18. Director / Owner payments - Accrue / Pay Directors a bonus

  • This should also be entered via payroll. SGC will also be payable on this additional amount
  • Single touch payroll must be set up for closely held employees by 1 July 2021

19. Director / Owner payments - Accrue / Pay Directors Fees

  • This should also be entered via payroll. SGC will also be payable on this additional amount

20. Director / Owner payments - Declare a Dividend

  • With franking credits before 30 June

21. Director / Owner payments - Progressive Changes to Company tax rate

Progressive changes to company tax rate

22. Staff Payments - Accrue / Pay staff a bonus

  • In recognition of their efforts during the financial year. This should also be entered via payroll and paid prior to 30 June. SGC will also be payable on this additional amount

23. Staff Payments - Pay Q4’s SGC for employees

  • By 25 June 2022 for it to be received by superfunds before the 30 June cut off

24. Staff Payments - Staff recognition / gifts

  • Issue gift cards up to $299 in recognition for their efforts during the financial year

25. Asset Strategies -Purchase assets before financial year end

  • Tools, office furniture, cars, printers, etc. Using the instant asset write off, you can claim an unlimited deduction until 30 June 2023.

26. Asset Strategies - Instant asset write off for cars

  • Passenger vehicles with a payload capacity for under 1.0 tonne is limited to $59,136.
    Delivery of the car must be this financial year. If you spend more than the limit, the excess is not depreciated or claimed in any way.

27. Asset Strategies - Create a tax loss

  • Companies who paid tax in 2019 / 2020 – purchase eligible assets before financial year end to create a tax loss in 2021. Use the Loss Carry Back Rules to claim a refundable tax offset.

28. Asset Register Review - Carry out maintenance

  • Necessary repairs or maintenance to premises, business equipment or business vehicles.

29. Asset Register Review - Asset write off

  • If you have an asset or depreciation schedule, review the list and see which assets can be written off.

30. Asset Register Review - Temporary Full Expensing – For eligible businesses

  • New assets purchased between 6 October 2020 and June 2023 can be depreciated in full (no threshold limit).
    This means the balance of the small business pool can be expensed.
    This may create a loss in the business and Loss Carry Back Rules may be applicable.

31. Operational Strategies - Replenish Supplies

  • Consumable supplies (Office stationery, workshop supplies, promotional items - not stock)

32. Operational Strategies - Make Donations

  • Donate to charitable organisations with DGR (deductible gift recipient) status

33. Operational Strategies - Tax returns on an accrual basis

  • Allows deductions for expenses even though you are yet to pay for them. Make sure you account for them in your bookwork.

34. Operational Strategies - Prepay business expenses

  • Under the small business concession, claim an immediate deduction for prepaid business expenses where the payment covers a period of 12 months and ends in the 21/22 year.

35. Operational Strategies - Crystallise a capital loss

  • If you have already realised a capital gain during the year, consider crystallising a loss on other assets prior to the financial year end. Or defer the capital gains (the contract date is critical!)

36. Operational Strategies - Delay income

  • The company tax rate remains at 25% from 1 July.

37. Operational Strategies - Use a bucket company

  • If cash is available to transfer, distribution earnings out for later distribution. Or when the owner retire or reduces their working hours.

38. Operational Strategies - Make use of the Small Business Restructure Rollover (SBRR) Provisions

  • Consider any required restructuring to take advantage of the (SBRR).

39. Operational Strategies - Raise Management Fees

  • Between entities before June 30.

Every individual and business should know that tax planning before 30 June is more important than tax planning after 30 June.
Contact your accountant to see what tax planning can be recommended.
R J Sanderson Pty Ltd
June 23, 2022

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