Small business owners are often bombarded with meeting tax obligations and business planning during the end of financial year in Australia. It’s important not to get caught up in a whirlwind and to be prepared for what’s to come.
As the end of the financial year 2024 ends, we’ve listed five quick tips to help you prepare for the upcoming tax time.
Write off bad debts before 30 June
Bad debt refers to outstanding balances from your debtors that are no longer recoverable. To get a tax deduction for bad debts, if your tax is prepared on an accrual basis, it must be written off before 30 June 2024. We highly advise that you get to work on your debtors’ list as soon as possible.
Keep Good Records
Reviewing your financial data will help you identify and resolve issues that may arise in the future.
It’s best to store all your records in one place like accounting or bookkeeping software. This will help you ensure all your records are accurate and up-to-date. Records like your Single Touch Payroll summaries, activity statements (BAS/IAS), PAYG withholdings and the like should be properly reviewed and recorded regularly– not just during tax season.
Manage Your Tax Deductions
Being informed of all the tax deductions you are entitled to is a smart move for any business as it gives you valuable savings. You can claim a tax deduction for most business expenses like motor vehicle expenses, bank fees, material purchases, insurance and other day-to-day operating expenses.
Using an experienced business tax accountant or tax agent can help you ease the burden of preparing and lodging your tax return. They will ensure you claim all the deductions and get the best tax result possible. Craig Allen & Associates, for one, specialises in preparing business tax returns.
Meet Your Super Contributions
If your business has superannuation guarantee obligations, you must pay employee contributions. You can claim a deduction on this if you meet your obligations by 30 June 2024.
To get a superannuation tax deduction, you must make the payment well before 30 June 2024. For your June quarter superannuation, we advise you to pay around two weeks before the year-end. This is especially easier if payrolls are standard and can easily be calculated
For business owners and individuals not subject to superannuation guarantee obligations, you can claim personal deductions for superannuation as follows:
- From 1 July 2024, the general concessional contributions cap is $30,000 for all individuals regardless of age.
- For the 2023-24 financial year, the general concessional contributions cap was $27,500 for all individuals regardless of age.
Purchase of assets under the instant asset write-off rules
According to the Australian Taxation Office (ATO), eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year the asset is first used or installed ready for use. The write-off allows you to reduce your taxable income when you purchase an asset.
The instant asset write-off can be used for multiple assets if the cost is less than the relevant threshold. This is true for both new and second-hand assets. They recently announced that the instant asset write-off threshold will increase to $20,000 for the 2023–24 and 2024–25 fiscal years.
“Small businesses, with an aggregated turnover of less than $10 million, will be able to immediately deduct the full cost of eligible assets costing less than $20,000 that is first used or installed ready for use between 1 July 2023 and 30 June 2025.” (Source: ATO)
Prepayment of Expenses
Prepaid expenses are goods or services you pay in advance of using them. These goods or services can be done in whole or in part.
By paying expenses in advance, you can easily manage your tax deductions as you can recognise certain expenses faster. This may, in turn, reduce your taxable income and lower your tax liability for the current tax year. Be sure to consult your accountant about this tactic and how to utilise it properly.
Plan for the Next Financial Year
The end of the financial year is a good time to set new goals, create a budget and think of ways to improve your business for the new financial year. It’s also a good time to implement tax minimisation strategies with your trusted accountant or business advisor.
Get Expert Advice from Your Accountant
At Craig Allen and Associates, we can assist you with all your accounting and tax requirements, as well as provide expert advice on how to improve your business for the new financial year.
Schedule a free, no-obligation consultation by contacting our team at 039 558 7316 or emailing us at craig@craigallen.com.au.
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