The end of the financial year is fast approaching, which means it’s time to start thinking about your tax! We have 13 tips for tax planning in 2024 to help you prepare and manage your business’s financial accounts throughout the year.
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What tax claims are the ATO targeting?
As tax time approaches, the ATO like to let Aussies know what is going to be on their watchlist for the year. For the 2024 financial year, the ATO have put work-related expenses, rental property deductions and omitted income on their hit list.
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Strategic tax planning with your accountant
Short- term and long-term tax planning are two essential items that should be on your accountants agenda! Short term planning should look at anything you can or should be doing before financial year ends. Long term tax planning will go further and look at things like the flow of funds through your group structure and using your business and investment structures to protect and grow your family’s wealth while appropriately managing your tax liabilities.
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Do you have the best tax structures?
It’s a good idea to examine your personal assets, business structure, and where your investments are held. Certain structures can benefit from reduced or capped tax rates. For instance, the company tax rate is a flat 25% for small businesses in 2024, which can make a huge difference if your business is generating significant revenue.
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Keep detailed records
Maintaining accurate and detailed tax records is not only a requirement for the ATO but will allow your accountant to claim all available deductions for you. It also means that you can view more accurate and up to date figures for your business, enabling you to make timely strategic decisions.
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Carry out a stocktake
Performing a stocktake enables you to be able to get an accurate stock valuation, whilst also writing off any damaged, out of date or discontinued stock. Stock holdings can be valued at either cost or net realisable value, whichever is lower.
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Update your vehicle logbook/s
To make sure you claim the most on your motor vehicle expenses, ensure that your logbooks are up to date. Logbooks need to be renewed at least every 5 years, or when the use of the car changes materially.
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Look at your debtors
Have a look at your debtors with a view to writing off any debts you won’t recover. Written off debts will reduce your income in the year that you write them off, even if it’s not the year you invoiced them in.
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Document any trust resolutions
Trustees of discretionary trusts are obligated to document their resolutions on how the income from the trust is distributed to its beneficiaries before the 30th June each year.
If a valid resolution has not been completed by the 30th June, any default beneficiaries are eligible to the trust’s income, and are subject to tax. For any income which is obtained, but not distributed by the trust, the trust will be assessed at the highest marginal tax rate on this income.
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Take advantage of Instant Asset Write-Off
Using the small business depreciation rules for 2024 should allow businesses with a turnover less than $10m claim the full cost of new assets less than $20,000 installed and ready for use between 1 July 2023 and 30 June 2024. Note that this measure is still with Parliament so is yet to become law.
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Contribute to your super
Make sure you review your contribution caps and consider adding to your voluntary superannuation contributions! The concessional contribution cap for the 2024 financial year is $27,500 per person meaning you can contribute up to this cap before 30 June. Also, if your super balance is below $500,000 you may be able to contribute even more this year by taking advantage of your unused contribution caps of prior years. Make sure you review your superannuation and retirement plans before considering extra contributions and seek the help of a licensed advisor if needed.
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Pre-pay your expenses
You may be able to pre-pay some expenses that you will incur in the next financial year in the current financial year. For example, professional subscriptions, rent and insurance etc.
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Take advantage of negative gearing on any investment properties
When the expenses outweigh the income you receive on an investment property, you can claim the difference as a tax deduction. Now is a good time to review if there are any repairs to take care of or other expenses that can be paid before 30 June.
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Look into income protection
Should something ever happen to you, having income protection insurance can help to ensure your family is taken care of if you are out of action for any length of time. A licensed advisor can assist you in reviewing your insurance needs and find suitable products to suit your family. Income protection insurance is also tax deductible!
If you need to discuss any of the above, please do not hesitate to contact our office on: (03) 8393 1000.
