With 30 June just around the corner (hello EOFY advertisments), the end of the tax year will soon be upon us. Now is a good time to take a look at both your estimated taxable income being your business’s assessable income, less any allowable deductions for the current financial year.
If you are expecting to have a higher income in the current financial year, compared to your projections/expectations for the next financial year, talk to your accountant to consider:
Prepaying some of your 2023 expenses; for example your rent, insurance or subscriptions to professional associations in the 2022 financial year. Up to 12 months of the following year’s expenses can be deducted in the current tax year.
Paying your employee’s superannuation guarantee charge (SGC) before the 30 June date. We suggest at least 5-7 working days prior. The employer SGC you pay is deductible when paid.
Reviewing and postponing some of your invoicing for the current tax year, if appropriate.
Topping up your own voluntary superannuation contributions and exploring the carry forwad unused concessional contribution cap (more details can be found on the ATO’s website).
Taking advantage of depreciation measures, such as temporary full expensing, which enables you to immediately deduct the business portion of the cost of eligible depreciating assets that are first held and first used or installed ready for use for a taxable purpose between 6 October 2020 and 30 June 2022 (more details on the ATO website).
Reviewing your debtors and writing off any unrecoverable debts (find out more about deductibility for unrecoverable income).
if applicable, deducting any start-up expenses such as legal or accounting advice on your business structure, and fees in relation to establishing the structure, such as ASIC fees.
Hot Tip: refer to the ATO’s individual (sole trader) or company tax rate / base rate entity to identify your income bracket for calculating tax.
Additional hot tips and important read
Avoid spending on business assets for the sake of claiming tax deductions. Many times you will find yourself paying $1 to save 30 cents* in tax (*based on the most common business tax rate).
If your business makes a loss, you may be able to claim a deduction for it in a future year, offset it as a current year loss or carry back your tax loss. More details on business losses can be found here.
