Tax & Insurance
Sonny Rahim
Updated Dec 19, 2022
Mate Checked
This information has been reviewed by our SMSF Mates before it was published as part of our review process.
The following tax saving opportunities for 2020 has been prepared by one of our accountants, we hope you find it useful.
It contains some great tips about Superannuation for employers and employees.
If your accountant hasn’t provider similar advice or you are in the market for a new accountant, check out our recommended accountants article below
As the year end is approaching there are few tax strategies that we would like to draw to your attention to minimise the tax liabilities for your business:
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Prepay some of your expenses prior to 30 June 2020, eg
As part of the Government’s stimulus package, a business with less than $500 million turnover will be able to claim an immediate tax deduction for asset purchases less than $150,000 (excluding GST) purchased after 12 March 2020 until 31 December 2020. Small Business Entity pool balances under $150,000 will be written off.
For asset purchases greater than $150,000 or first installed and ready for use after 31 December 2020, a 50% deduction is available in the year of installation with the remainder of the asset’s cost depreciated under the usual depreciation rules. However, excludes capital works, water facilities, horticultural plant, fodder storage and fencing.
For motor vehicles used in the business however there is a limit of $57,581 (2019/20) and restricted to business use
Review your sales invoicing and postpone them for July 2020 for work not yet carried out, so that the sales is taxed in the next financial year.
If you are in business you can PAY the employees super prior to 30 June 2020.
A word of caution is that the superannuation fund must receive the funds by 30 June 2020 for it to be tax deductible
You can make up to $25,000 concessional superannuation contributions each year.
This can be either as employee or personal contributions
If you don’t use the full amount of your concessional contribution cap and your superannuation balance is less than $500,000 ($25,000 in 2019/2020), you can carry-forward the unused amount and take advantage of it up to five years later.
If any personal contributions are made don’t forget to give your superfund a notice of intent to claim and also make sure your superfund has acknowledged this.
Businesses which account on an accruals basis should review debtors and write off any bad debts before 30 June. Also, write off any obsolete or slow moving stocks.
Please remember that Job keeper Payments received from the ATO are assessable income to Businesses and any individuals who receive the payment. GST is not applicable
The cash flow boost is not taxable income. GST is not applicable.
Amnesty on unpaid superannuation guarantee. A number of incentives are available for employers to pay any unpaid Superannuation Guarantee (SG) amounts relating to the period 1 July, 1992 to 31 March, 2018.
Normally, where the employer has not paid the SG for employees the employer will be assessed the Superannuation Guarantee Charge (SGC) which is not tax deductible. The charge includes the SG not paid, interest on the SG shortfalls and an administration fee (usually $20 per employee per quarter).
The incentives to pay any SG shortfall and the charge apply until 6 September 2020, and include:
A new law has been introduced that will generally deny individuals tax deductions for costs incurred on holding vacant land.
Previously, you could only deduct for costs incurred for producing assessable income or carrying on a business. However, because it is difficult to determine exactly what purpose vacant land is being held for, the new law will generally deny tax deductions for costs incurred on holding vacant land from 1 July 2019, regardless of when the land was initially acquired.
Examples of such holding costs that may be denied under this new law and may instead be included in the cost base of the land for CGT purposes include:
You may still be able to deduct holding costs on vacant land if:
If you were a non-resident for tax purposes at the time you sold your home (i.e. when you signed the sale contract), you will no longer qualify for the main residence exemption. This means you will be required to pay capital gains tax on gains made on the sale of your main residence.
Some non-residents will still qualify for the main residence exemption if:
This change is particularly relevant for Australian expatriates or people who have gone overseas for a work-secondment. Note, if you were a resident for Australian tax purposes at the time you signed the sale contract, you will qualify for the main residence exemption.
With many individuals working from home because of COVID-19 restrictions, from 1 March to 30 June 2020, you will be able to use a simplified method to claim your additional running expenses at a rate of 80 cents per work hour.
This simplified method covers all running expenses eg :
However, you can’t claim a deduction for mortgage interest, rent and rates or the cost of coffee, tea or milk that an employer would have otherwise provided for the employee at work.
If you use this simplified (80 cents per hour) method, you can’t claim any other expenses for working from home for that period
Eligible individuals are able to withdraw up to $10,000 of their superannuation before 1 July 2020 and a further $10,000 from 1 July 2020 to 24 September 2020. This will apply to people who are:
Temporary residents are only allowed one withdrawal option of $10,000 up to 30 June 2020.
You do not need to pay tax on any withdrawals released early from superannuation and these amounts do not need to be included in your tax return.
To help retirees to keep more money in their superannuation as a nest egg, the minimum draw-down requirements for account-based pensions have also been reduced by 50 percent for 2020 and 2021.
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If your accountant hasn’t provider similar advice or you are in the market for a new accountant, check out our recommended accountants article below.
You might also like our article on why re-financing debt to get the best deal is important.
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