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With the end of the tax year approaching, now is the time to see what you can do to reduce your tax for 2023. This would mean more money in your pocket for you and your family to enjoy.

Business Tax

Temporary Full Expensing

Purchase equipment before year end as businesses with an aggregated turnover of less than $5 billion can immediately deduct the business portion of the cost of eligible new depreciating assets ( ie there is no upper limit) and if turnover is less than $50 million then also second-hand assets.

This scheme runs until 30 June 2023. These assets need to be in use or ready for use by 30 June 2023.

As released in the latest budget, from 1 July 2023 until 30 June 2024, the Government will temporarily increase the instant asset write-off threshold from $1,000 to $20,000. ( ie the no threshold limit decreases to $20 000)
Small businesses with an aggregated annual turnover of less than $10 million will be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2024. The $20,000 threshold will apply on a per-asset basis, so small businesses can instantly write off multiple assets.

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 $60,733 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 and it is used 100% for business purposes.

 

Pay Employee Superannuation before year end

Pay the June superannuation amounts by 20th June to be sure that it gets into the superfund by 30 June. To claim a tax deduction in the 2023 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 2023. If received from 1 July 2023, then this can only be claimed in the 2024 tax year.  

Changes to Employee Superannuation Contributions

From 1 July 2023, the rate of super increases to 11.0%

From 1 July 2026, employers will be required to pay their employees’ superannuation guarantee entitlements on the same day that they pay salary and wages.  Consider implementing this already as it will be a good way to get on top of your cash flow.

Defer Income

If possible, defer issuing further invoices and receiving
cash/debtor payments until after 30 June 2023. This
strategy pushes tax payable into the  2024  year.

Bring Forward Expenses

Purchase consumable items BEFORE 30 June 2023.
These include marketing materials, consumables,
stationery, 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
2023.

Choose an appropriate valuation method that gives the lowest closing stock value: Choose between the following methods:

Cost

Market Selling value

Replacement Value

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 2023. 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
June 2023.

Prepay Expenses 

If you are a small business entity, ( ie your aggregated turnover is less than $10M) you can make prepayments (up to 12 months) on expenses (e.g. loan interest, rent, subscriptions) BEFORE 30 June 2023 and
obtain a full tax deduction in the 2023 financial year.

Director Fees

A company can declare director fees before 30 June 2023 and claim these as an expense in 2023. They should be paid by 30 September 2023.

These fees would only be included in the director’s personal income in the 2024 tax year when it is paid.

Private company (Div 7A) loans

Business owners who have borrowed funds from their company in previous years must ensure that the appropriate principal and interest repayments are made by 30 June 2023. Current year loans must be either paid back in full or have a loan agreement entered in before the due date of lodgement for the company return, or risk having it counted as an unfranked dividend in the return of the individual.

To see what you can do to minimise your personal tax click here.

Should you have any questions specific to your situation, contact us at questions@accoladeaccounting.com.au or contact  Accolade Accounting on (08) 6263 4466 or (03)  9524 3145 to get further advice.