With the end of the tax year approaching, now is the time to see what you can do to minimise your tax for 2021. This would mean more money in your pocket for you and your family to enjoy and put some fun back into the tough year it has been.
Temporary Full Expensing
Businesses with an aggregated turnover of less than
$5 billion can immediately deduct the business portion
of the cost of eligible new depreciating assets and if turnover is less than $50 million also second-hand assets.
This scheme runs until 30 June 2022.
For the 2021 tax year, any eligible assets bought from 1 July 2020 until 5 October 2020 can be immediately written off under the instant asset write off scheme, which has a cost limit of $150 000.
From 6 October 2020 until 30 June 2021 there is no cost limit and eligible assets under the temporary full expensing scheme, can be immediately deducted.
These assets need to be in use or ready for use by 30 June 2021.
Car cost limit and how it applies
Both the instant asset write-off scheme and the temporary full expensing scheme have a limit on how much of the cost you can claim for a car.
Both schemes only allow you to claim up to $59,136 of the car’s value (excluding GST) no matter its price. This limit disappears, however, if you’re purchasing a commercial vehicle capable of carrying more than nine passengers or more than one tonne.
Pay Employee Superannuation before year end
To claim a tax deduction in the 2021 financial year, you
need to ensure that your employee superannuation
payments are received by the super fund or the Small
Business Superannuation Clearing House (SBSCH) by 30
June 2021. You can contribute up to $25 000 into super for 2021. This limit will increase to $27 500 for 2022.
If possible, defer issuing further invoices and receiving
cash/debtor payments until after 30 June 2021. This
strategy pushes tax payable to the 2022 year.
Bring forward Expenses
Purchase consumable items BEFORE 30 June 2021.
These include marketing materials, consumables,
stationery, printing, office and computer supplies and motor vehicle repairs.
Spend the money now and get the deduction this year.
Year end Stock Take
If applicable, you need to prepare a detailed Stock
Take and/or Work in Progress listing as at 30 June
2021. Review your listing and write-off any obsolete or
worthless stock items.
Write off Bad Debts
Review your Trade Debtors listing and write-off all bad
debts BEFORE 30 June 2021. Prepare a management
meeting document listing each bad debt, as evidence
that these amounts were written off prior to year-end
and enter these into your accounting system before 30
Small Business Concession taxpayers can make
prepayments (up to 12 months) on expenses (e.g. loan
interest, rent, subscriptions) BEFORE 30 June 2021 and
obtain a full tax deduction in the 2021 financial year.
A company can declare director fees before 30 June 2021 and claim these as an expense in 2021. They should be paid by 30 September 2021.
These fees would only be included in the director’s personal income in the 2022 tax year.
Should you have any questions specific to your situation, contact us at firstname.lastname@example.org or contact Accolade Accounting on (08) 6263 4466 or (03) 9524 3145 to get further advice.