tax time

24 Jun

TAX PLANNING FOR EOFY – 2024

Posted at 13:41h

SUPER CONTRIBUTIONS

Please note that an individual can have up to $27,500 contributed per annum on their behalf from all employment sources combined (including any life insurance premiums owned via super). You should keep this in mind if you are aiming to utilise the maximum contribution.

The good news is that since 1 July 2018 you may be able to carry forward any unused concessional contributions on a rolling five year basis. Any rolled over amounts not used within the five years will expire.

In order to utilise the new ‘catch up’ rules you need to be:

  1. still eligible to make contributions into super – meaning under 65 years of age or, alternatively, meet the work test between ages 65 and 74; and
  2. Have a total superannuation balance (TSB) of less than $500,000 as at 30 June of the previous financial year.

Should you wish to maximise super contributions, please check with your respective superfunds on cut off dates.

REMINDER FROM 1 JULY 2024 – SUPERANNUATION GUARANTEE RATE INCREASE

The superannuation guarantee rate is scheduled to increase to 11.5% from 1 July 2024. All employers should ensure that they have made the necessary adjustments to their payroll systems by 1 July 2024.

CHANGES TO PERSONAL TAX RATES

The implementation of the ‘Stage 3 tax cuts’ on 1 July 2024, alongside recent amendments, alters personal income tax rates and brackets. See below a comparison table detailing these changes for your reference.

  • In light of rising interest rates and other cost of living pressures, tax savings can provide valuable relief. However, it’s advisable to explore additional strategies with a financial planner. Consider the timing of asset sales, considering potential changes in your marginal tax rate. Pre-paying tax-deductible expenses, such as premiums on income protection policies or rental property expenses, may also offer tax benefits. Evaluate these decisions based on your assessable income, marginal tax rate, and the resulting value of deductions. Remember to factor in market risks and holding costs, particularly for real property assets.

$20K INSTANT ASSET WRTITE-OFF FOR SMALL BUSINESSES EXTENDED TO 30 JUNE 2025

Government has announced that it will temporarily set the instant asset write-off threshold for small business entities at (less than) $20,000 for the 2025 income year. Small businesses with an aggregated annual turnover of less than $10 million will generally 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 by 30 June 2025. The asset threshold applies on a ‘per asset’ basis, so small businesses can instantly write off multiple assets. The eligible items would be laptops and computers, medical or work-related equipment, cars, furniture for your practice or home office etc.

Assets valued at $20,000 or more (i.e., which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year thereafter. The provisions that prevent small businesses from re-entering the simplified depreciation regime for five years if they opt-out will continue to be suspended until 30 June 2025. From 1 July 2025, the instant asset write-off threshold will revert to (less than) $1,000.

EMPLOYEE GIFTS

Low dollar value and irregular gifts can be provided to employees of your business, including yourself, and a tax deduction obtained for the cost of them. The gift cannot be cash or alcohol but it can be a store gift card, hamper or book/music voucher. The ATO applies some rules in order for the gift to be treated as tax-free. These are that any one gift must be no more than $299; and their provision should be irregular.

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