It might be hard to believe it but June 30 really is just around the corner, and that means it’s time to start planning for tax time. Of course, we are gearing up for the end of financial year and will be ready to get you sorted when the time comes – but here’s some things you can do to get organised ahead of time and a few changes to be aware of for 2021 and beyond.
Getting your books in order
Having your books organised and accounts reconciled is a sure fire way to speed up the tax process come the end of the financial year. If this is something that you need help with, please reach out to us and we would be happy to help. It could also be an opportunity to consider cloud accounting software if you haven’t already. If you need help getting online, we can assist with that too.
It’s important to look at how much you have contributed to your super over the last 12 months and assess whether it’s enough. If you haven’t already, it’s also a good time to consider whether a self managed superfund would be a good option for you and your business moving forward.
We can often put a strategy in place where if you can contribute more than the $25k deductible amount allowed for the year, you can get a deduction for the extra amount too. Not sure how much you (or your employer) have contributed? We can help you find out.
James and Brent love all things super – so chat to them.
Deductions, deductions, deductions
Speaking of deductions, if you’re looking at making any business purchases that you’re hoping to write off this financial year, don’t miss the June 30 deadline. It’s also a good idea to look at what you can afford to pay in advance so that you can claim the deductions this year – such as insurance and accounting fees ;).
If you are a new, small or medium sized business with a turnover of less than 10 million dollars you can immediately claim deductions for some start up costs including accounting and legal services. Instant asset write offs mean you can claim an immediate deduction for the entire cost of the asset too – think computers, cars etc.
A couple of other noteworthy bits…
Did you buy and sell any crypto currency this year? Any gains you might have made form part of your taxable income.
Business that holds stock, don’t forget to account for this and do a stocktake.
If you received Jobkeeper this year, it also has an impact on the taxable income of your business so it’s important to note too.
Tax rate changes and refunds for companies
The federal government has introduced some changes to both individual and company tax rates in 2021. For individuals, the 19% tax band increased from $37,000 in 2020 to $45,000; and the 32.5% tax band increased from $90,000 in 2020 to $120,000.
For companies, tax rate for base rate entities has been lowered from 27.5% in 2020 to 26% in 2021.
New loss carry-back measures have also been introduced to provide a tax refund to companies after lodging their tax returns. Companies with a turnover of less than $5 billion can choose to carry back their 2020 tax losses and offset it against their 2019 income tax liability; or 2021 tax losses and offset it against their 2019 and 2020 income tax liability, noting the amount of refund/offset is limited to the lesser of the amount of tax paid previously or the surplus in the franking account at 30 June 2021.
Looking back to move forward
As well as the admin side of things, this time of year is also an important time to reflect on what worked and what didn’t work for your business in the last financial year. For many businesses, due to the pandemic, getting through 2020/2021 has been a mammoth effort, for others it’s been a time of new growth and opportunity. Regardless of your situation, there will be things that have worked out and things that haven’t. Now is the time to learn from the past year and put in place a plan to move forward. From a financial point of view, consider your cash-flow and budget.
We understand that tax time can be daunting for some business owners and individuals, but it doesn’t need to be. Our team is on your side and we are ready to make this end of financial year as painless and stress-free as possible. Get in touch today!