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.

Mark Lisle

Mark Lisle

Mark is our managing partner and has been with the firm for over 36 years. He brings a wealth of experience in all areas of our business, including business advisory, taxation and self managed superannuation.

Mark’s ethos is that good advice stems from working closely with our clients and being prepared to go that extra step to assist them in meeting their goals and optimising their financial position.

Mark is a Fellow of Chartered Accountants Australia and New Zealand, an accredited SMSF Specialist and a registered SMSF auditor.

Outside of work, Mark enjoys trying to keep fit and spending time down at his “second home” in Port Fairy.

Josh Laing

Josh Laing

Joshua began working at Rundles in 1999 whilst still completing his Bachelor of Business (Accountancy) degree at RMIT. After graduating in 2001 he was admitted to the Institute of Chartered Accountants Australia and New Zealand in 2004. Joshua spent two years working in London before returning to Rundles in 2006.

Josh has a wealth of knowledge across a broad range of industries as well as in Self Managed Superannuation. Josh enjoys working with family groups and businesses to ensure they’re structured correctly to maximise asset protection, succession planning and management of tax.

Married with 2 children, Josh spends his weekends with his family and following the Tigers.

Brad Roach

Brad Roach

Brad has been a part of the Rundles Team since 1996 and became a Partner of the firm in 2014. During his time at Rundles, Brad has developed a strong relationship with his clients across a wide range of industries and is dedicated to assisting them to reach their personal and business goals.

Brad is passionate about seeing his clients succeed and utilises his extensive experience in public practice to provide a holistic service to his clients. He also has a wealth of experience in superannuation, particularly self managed superannuation funds.

In his spare time, Brad likes to play a round of golf with friends and enjoys watching his two sons play various sports.

Peter Davison

Peter Davison

Peter graduated from RMIT with a Bachelor of Business (Accountancy) with distinction in 1976. He joined Rundles upon graduating. Peter has been a member of the Institute of Chartered Accountants since 1979 and a Fellow since 1991. As an active yachtie of many years, Peter can often be found on the water. Otherwise, he and his wife spend time with their friends and extended family.

Sandy Gilbert

Sandy Gilbert

Sandy was admitted to the Institute of Chartered Accountants in 1973 and has been a Fellow since 1983. He gained extensive experience in auditing and accounting services over seven years at Pannell Kerr Forster before joining Rundles in 1973. Sandy is married with three children. A former amateur footballer of some note, Sandy is still an avid follower of the game and enjoys weekends at his country retreat.