As we move into the last quarter of the financial year, tax planning is fast becoming reality. Whilst planning has been challenging for most businesses over the last 12 months, the time to act is now as your options may be limited as we edge closer to 30 June.
All businesses can effectively tax plan and we believe it is to be a key consideration in astute business management. We have compiled a list of our top tips for the 2022 tax planning season:
- Bring forward the acquisition of capital assets to take advantage of temporary full expensing – This was recently extended to 30 June 2023 and is available for any business that has an aggregated turnover of less than $500 million.
- Write off the balance of your small business pool – Small businesses can access accelerated depreciation deductions, even without acquiring new assets, until 30 June 2023.
- Bring forward the payment of Superannuation for the June quarter to ensure it is deductible
- Top up superannuation contributions for directors and associates – The concessional contributions cap is $27,500.
- Pre-pay expenses to claim a deduction – The expense can be prepaid for up to 12 months for businesses with an aggregated turnover of less than $10 million.
- Declare dividends and reconcile director/shareholder loans – You may receive an unfranked dividend if you do not meet the minimum repayments under Division 7A.
- Execute income distribution resolutions prior to 30 June – With the introduction of Section 100A thoughtful consideration needs to be given.
In light of the handing down of the 2022 Federal Budget we have further identified the following tax planning opportunities:
- 120% tax deduction for small businesses (aggregated turnover <$50 million) for expenditure incurred on external training courses provided to their employees, commencing on budget night to 30 June 2024. The boost for eligible expenditure incurred by 30 June 2022 will be claimed in following years income tax return.
- 120% tax deduction for small businesses (aggregated turnover <$50 million) on business expenses and depreciating assets that support their digital adoption, such as portable payment devices, cyber security systems or subscriptions to cloud-based services, commencing on budget night until 30 June 2023. The eligible expenditure is capped at $100,000 per annum and eligible expenditure incurred by 30 June 2022 will be claimed in following years income tax return.
- Extension of the 50 per cent reduction of the superannuation minimum drawdown requirements for account-based pensions and similar products for a further year to 30 June 2023.
Please note that the aforementioned budget items may be subject to legislative changes.
There are many opportunities to minimise your tax position, and it is important that you seek professional advice from competent advisers.
Your trusted JBC Corporate adviser will be able to understand your expected position through our detailed analysis workpaper and provide tailored options to your business. We strongly recommend that you contact your trusted JBC Corporate adviser sooner rather than later to arrange a tax planning meeting on 08 6323 7000.
Liability limited by a scheme approved under Professional Standards Legislation.