As the new financial year approaches us, below are some additional tax planning strategies you may want to or are currently discussing to see if it is the right fit for you and your business operations.
Accounting for GST on a cash basis
This type of reporting means that you collect and or pay GST in the period you actually receive payments, not when you issue your invoice.
GST cash accounting is also good for improving your cash flow.
Small business restructure rollover
This can be useful in situations where you may be looking to change from a family partnership to a family trust. If you’re a small business entity (SBE), you can transfer an active asset of your business (for example, goodwill) to another SBE that is part of a genuine business restructure; being that there is no change in the ownership of the assets. As a result, capital gains liability will not arise.
Please note that state transfer tax might still apply.
Temporary full expensing
You could take advantage of the government’s temporary full expensing stimulus measure which allows eligible businesses to:
You may be eligible for temporary full expensing if you are one of the following:
- a business with an aggregated turnover of less than $5 billion
- a corporate tax entity that meets the alternative income test.
For the 2020–21,2021–22 and 2022-23 income years, businesses can claim in its tax return a deduction for the business portion of the cost of:
- eligible new assets first held, first used or installed ready for use for a taxable purpose between 7.30pm AEDT on 6 October 2020 and 30 June 2023
- eligible second-hand assets where both
- the asset was first held, first used or installed ready for use for a taxable purpose between 7.30pm AEDT on 6 October 2020 and 30 June 2023
- the eligible entity’s aggregated turnover is less than $50 million
- improvements incurred between 7.30pm AEDT on 6 October 2020 and 30 June 2023 to
- eligible assets
- existing assets that would be eligible assets except that they are held before 7.30pm AEDT on 6 October 2020
- eligible assets of small business entities using the simplified depreciation rules and the balance of their small business pool.
Deduct the business portion of the cost of eligible new depreciating assets that are first held and first used or installed ready for use for a taxable purpose, between 7.30pm (AEDT) on 6 October 2020 until 30 June 2023.
You can make a choice to opt out of temporary full expensing for an income year on an asset-by-asset basis if you are not using the simplified depreciation rules.
There are several depreciation methods available for your business as well as tax strategies and each has its own advantages and disadvantages. To determine which is right for your business, take action today and schedule a consultation with us here.