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2024 Year End Tax Planning Guide (Part 1)

In May and June, we will add two articles to our website that help you plan and take action before the end of the 2023-24 financial year. Both Part 1 and 2 will cover the following, though Part I focuses on key strategies to manage your tax bill. All are worth dedicating time to review and think about how your business can organize your affairs in these ways.

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Areas of tax planning to be considered:

  • Key Tax Minimisation Strategies.
  • Round Up of Other Year End Tax Issues.
  • Other Tax Effective Strategies for Businesses to Consider.
  • Superannuation Tax Planning Opportunities.
  • Immediate Write Off & Temporary Full Expensing for Individual Small Business Assets.

Key Tax Minimisation Strategies  

Delay Deriving Assessable Income

One effective strategy is to delay deriving your income until after June 30, 2024.  Consider the following:

a. Delaying the Timing of the Derivation of Income until after June 30.

b. Timing of Raising Invoices for Incomplete Work (Businesses)

This tactic needs thought as it can adversely affect your cash flow and lead to issues better left alone. Invoices raised before 1-7-2024 are income in this financial year. Please note, not banking amounts received before June 30 until after June 30 do NOT qualify because the income is deemed to have been earned when the money is received, or the goods or services are provided (depending on whether you are on a cash or accruals basis of accounting).

·       Cash Basis Income - Some income is taxable on a cash receipts basis rather than on an accruals basis (e.g. rental income or interest income in certain cases). You should consider whether some income can be deferred.

·       Consider delaying your invoices to customers until after July 1 which will push the generation of the income into the next financial year and defer the tax payable on it. If you operate on a cash basis, you simply need to delay receiving the money from your customers until after June 30.

·       Lump Sum Amounts - Where a lump sum is likely to be received close to the end of a financial year, you should consider whether this amount (or part thereof) can be delayed or spread over future periods.
 

2Bringing Forward Deductible Expenses or Losses

Prepayment of Expenses
In some circumstances, small businesses and individuals who derive passive type income (such as rental income and dividends) should consider pre-paying expenses prior to 30 June 2024. A tax deduction can be brought forward into this financial year for expenses like:

  • Employee Superannuation Payments including the 11% Superannuation Guarantee Contributions for the June 2024 quarter (any such contribution MUST be received by the Superannuation Fund by June 30, 2024 if a tax deduction is to be claimed).
  • Superannuation for Business Owners, Directors, and Associated Persons.
  • Wages, bonuses, commissions, and allowances.
  • Contractor Payments.
  • Travel and accommodation expenses.
  • Trade creditors.
  • Rent for July 2024 (and possibly future additional months – speak to your accountant to see if this is possible in your case).
  • Insurances including Income Protection Insurance.
  • Printing, Stationery and Office Supplies.
  • All forms of advertising and promotion.
  • Utility Expenses - Telephone, Electricity & Power.
  • Motor Vehicle Expenses - Registration and Insurance.
  • Accounting Fees.
  • Subscriptions and Memberships to Professional Associations and Trade Journals.
  • Repairs and Maintenance to Investment Properties.
  • Self Education Costs.
  • Home Office Expenses – desk, chair, computers etc. This area of expenses has changed significantly in recent years.  Speak to your accountant about your situation.
  • Donations to deductible gift recipient organisations.
  • If appropriate, consider prepaying any deductible investment loan interest. This could include interest payments on an investment loan for either an investment or commercial property or an investment portfolio you hold.

A deduction for prepaid expenses will generally be allowed where the payment is made before 30 June 2024 for services to be rendered within a 12-month period. While this strategy can be effective for businesses operating on a cash basis (not accruals basis).
 

Superannuation Contributions - some low or middle-income earners who make personal (after-tax) contributions to a superannuation fund may be entitled to the government co-contribution. The amount of government co-contribution will depend on your income and how much you contribute.
 

Capital Gains/Losses – Note that the contract date (not the settlement date) is usually the key sale date for capital gains tax purposes. Here are several important points regarding the management of capital gains and capital losses on a sale of your assets from a tax planning perspective:

      i.         If possible, consider deferring the sale of an asset with an expected capital gain (and applicable capital gains tax liability) until it has been held for 12 months or longer. By doing so, you could reduce your personal income tax. For example, if you hold an asset for under 12 months, any capital gain you make may be assessed in its entirety upon the sale of that asset.

    The Capital Gains Tax (CGT) Calculation Method*

Individual Taxpayer

Date of CGT event   

CGT payable on an asset held < 12 months

CGT payable on an asset held ≥ 12 months

From 21/09/1999

Tax on 100% of nominal gain

Tax on 50% of nominal gain

     ii.         * A capital gain will be assessable in the financial year that it’s realised.
 

   iii.         If possible, consider deferring the sale of an asset with an expected capital gain (and applicable capital gains tax liability) to a future financial year. By doing so, you could help reduce your personal income tax for the current financial year. This could also be of benefit if, for example, you expect that your income will be lower in future financial years compared to the current financial year.
 

   iv.         If appropriate, consider offsetting a realised capital gain with an existing capital loss (carried forward or otherwise) or bringing forward the sale of an asset currently sitting at a loss. By doing so, you could reduce your personal income tax in this financial year. Note that a capital loss can only be used to offset a capital gain.
 

Accounts Payable (Creditors) - If you operate on an accruals basis and services have been provided to your business, ensure that you have an invoice dated June 30, 2024, or before so you can take up the expense in you accounts for the year ended 30th June 2024.

 

Please do not hesitate in contacting us if you have any questions on the above or other tax related matter.

Louise McNeich

Louise is a CPA with a Masters in Professional Accounting and a diploma of Financial Planning. Louise has been in Public Practice for 21 years and has been the principal of LMC since 2012. With a focus on small business support services and self-managed super funds, Louise is passionate about helping small businesses achieve their potential through good cashflow management and strategies for success. Louise and her family enjoy the space and tranquility of the Noosa hinterland with a small acreage block complete with dogs, chickens, geese, ducks and donkeys!

Lesley Joyce

Lesley is our individual taxation specialist and has over 23 years experience in preparing individual and small business returns. Lesley loves country music and line dancing and having recently relocated closer to the coast, enjoys a walk along the beach. Lesley is a proud Nana to her 14 grandchildren.

SuzAnne King

Suzanne is our Client Service Coordinator. She has worked in accounting practices for 20+ years and has expert knowledge in all things relating to Corporate Compliance. She is an active local community volunteer. In her leisure time she enjoys wandering in ancient places and reading biographies.

Kristie Virgo

Kristie has recently joined LMC Financial Group in Office Administration and Reception. She has run her own interior design small business for 20 years and when she is not at LMC she continues to work with clients on the Sunshine Coast. Our new office space has been designed by Kristie and Louise and brings a fresh warm approach to accounting in Cooroy.

Kelly Waldron

Kelly has qualifications in accounting and bookkeeping and has over 20 years’ experience in these areas. Kelly is a local to the beautiful sunshine coast and town of Cooroy and is ready to help with all your accounting and bookkeeping needs, nothing is too difficult. Kelly loves spending time with her family and everything the Sunshine Coast offers, we do really live in paradise.

Business Taxation Services

No client too big or too small. At LMC Accounting we make sure we get to know your business, so that we can offer you sound financial and accounting advice and the best service possible, taking care of your tax obligations in a timely and efficient manner.

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Tax Planning

Forward planning and prior preparation is key! Contact us today and give yourself the opportunity to minimise tax before the 30th of June!

Contact us today to discuss how we can work together: (07) 5447 0067 or email us at admin@noosaaccounting.com.au

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All small businesses must be built on a strong foundation of record-keeping. Without accurate information about business income and expenses, it is not possible to effectively plan, grow or sell a business.

We offer many options to suit various budgets and various sized businesses. We use all major accounting software providers so if you have a preference, that is fine too.

Cloud-based accounting software is a great way of keeping your business records up to date, easily accessible and at an affordable price – talk to us about your options today.

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Every small business has tax and reporting obligations every year, every quarter and even every month or week (think Single Touch Payroll!).

We can make sure your compliance is up to date and your reporting obligations are met in full and on time. Stress less and focus more on your business while we do what we do best – accounting!

We also provide comprehensive tax planning analysis so we can assist you to effectively plan for any tax issues.

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It is important to have good bookkeeping processes in place and be compliant with tax office obligations, but you also need to know if your small business is or will be profitable. Otherwise what is the point!

Let us help you examine where your business is at and create a Profit Plan to clearly identify your income goals, realistic expenditure items and potential profit-making opportunities as well as highlight any financial hurdles that may be in your way.

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It is time to create real profit in your small business, real cash in a real bank account that you can spend without feeling guilty!

Knowing where your money is going and how much you actually have to spend at any point in time is a game-changer when it comes to creating real profit. We can assist you to put the processes in place to effectively manage your cashflow once and for all so that you never have to worry about that next BAS payment or super liability and at the same time, build real profit into your business.

Put your Profit First, not last and you will ensure that your business works for you not the other way around.

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Your business is an asset and if you can ensure that your small business asset has value then you have an asset you can sell.

Imagine someone paying you for your business that you may have built from the ground up? All that time, money and energy is now being returned to you because you have created value in your business.

Learn how to create that value, ensure you have the processes in place so that you can spend time on your business not in your business and watch your business grow.

Contact us today to discuss how we can work together: (07) 5447 0067 or email us at admin@noosaaccounting.com.au

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Let us help with your Super Fund

Let LMC Accounting and Financial Services, Noosa, help you to decide if a self managed super fund is right for you and your financial circumstances. Setting up a DIY super fund can be a really straightforward process but it needs to be set up properly right from the start.

Do you want to simplify your Super Fund but don’t quite know where to begin. With support from us at LMC Accounting we can help you to make this happen, saving you unnecessary stress, time and money.

At LMC Accounting we make sure you understand all of your Self Managed Super Funds options and obligations as well as advice regarding rules, regulations and investments.

Have you thought about your retirement years? Are you concerned you may not have done enough preparation to live comfortably in your twilight years? The sooner you put plans in place, the greater benefits you will have in the long run.

We offer reasonable rates and efficient service coupled with the best advice. Contact us to find out how we can help you with your Super Fund requirements and planning for your future.

Contact us today to discuss how we can work together: (07) 5447 0067 or email us at admin@noosaaccounting.com.au

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We can help you with your individual tax returns including advice and assistance with:

  1. Work-related deductions
  2. Rental properties including short-stay rentals
  3. Investment income reporting including dividends and managed funds
  4. Capital gains including real estate, shares and crypto!
  5. Foreign income
  6. Non-resident tax matters
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Contact us today to discuss how we can work together: (07) 5447 0067 or email us at admin@noosaaccounting.com.au

Tax Diary

General Calculators

 

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