Business Toolbox

Prepay expenses before the end of the year 

• If your business turns over less than $10 million per year, you can claim 100% deduction in the year an expense is paid.

Bring forward the purchase of plant and equipment

• Equipment you use and install by June 30, 2021 will be fully tax deductible in the current year.
• Your General Asset Pool can be deducted in full this year.
• You can choose whether your assets not held in your General Asset Pool can be fully deducted.

Utilise loss carry-back rules

• Assess whether this encourages further immediate asset write-offs.
• Review the impact on your franking account, and whether you have adequate franking credits to pay dividends.
• You may need to change shareholder remuneration from dividend to a deductible director expense.

Maximise your tax-deductible debt 

• Loans for private purposes are not tax deductible.
• Review whether refinance options may be available to split your deductible vs non-deductible debt.
• Determine whether repayments on loans can be restructured, as the new rules limit the deductions available against vacant land.

Maximise superannuation contributions

• Super is only deductible if paid by June 30.
• Annual concessional contribution caps are $25,000.
• Assess whether you are eligible to utlise carry-forward of unused concessional contribution caps from prior years.
• Salary earners can make concessional member contributions, as the previous restriction (10 per cent rule) no longer applies.

Write off bad debts

• If debtors are not recoverable after all action has been taken, then write off the bad debt before June 30 to bring to account the expense.
• Ensure GST is adjusted.

Write off slow-moving or obsolete stock 

• Review your stock holding.
• If the market value is lower than the cost of the stock, you can obtain a deduction for the difference.

Utilise unrealised capital losses 

• Ensure you take advantage of capital losses within your group.
• Look at preparing distribution minutes in a way to utlise group losses.

Check depreciation rates on plants and equipment 

• Review depreciation schedules for any scrapped plant and equipment that can be written off.
• Review the effective lives of equipment and consider whether you can increase the rate of depreciation.

Repayment of Division 7A loans

• Cash repayments can reduce the requirements to declare dividends.

Plan for the change in company tax rates

• Base rate companies pay tax 26 per cent while all others pay tax at 30 per cent.
• Planning for rate change in FY 2022 to 25 per cent – consider the impact of timing on dividends and the tax credit vs top-up tax payable.
• Review any planning that could help achieve the desired tax rate.

Check your access to refundable franking credits

• Look for opportunities ahead of June 30, 2021 to access any refundable franking credits.
• Consider whether any loss entities could result in a flow of highly franked income resulting in a refund.

Claim eligible research and development activities

• When engaged in research and development activities, clearly document the activities and costs relating to those activities to take advantage of R&D Tax Offsets.

Plan for your tax position before June 30 

• Understand your options to reduce or defer tax payments.
• Plan your cashflow for tax instalments, and the tax due on tax return lodgements.
• Identify opportunities to vary tax instalments and improve cashflow.
• Implement the tax planning measures listed above, as well as other savings.