Year-end Tax Tips

Having a tax plan in place before 30 June will enable you to make strategic decisions to maximise your returns come tax time.

Taking advantage of instant asset write-off

  • Acquiring any depreciating asset (that is first used or installed ready for use after on or after 7.30pm 2 April 2019 and on or before 30 June 2019) that has a GST-exclusive (where appropriate) cost of less than $30,000;
  • Making capital improvements (i.e., second element costs) to an existing asset that cost less than $30,000 (GST-exclusive where appropriate) after 2 April 2019 and on or before 30 June 2019,

Prepayment of Expenses

You can claim items straight away if:

  • Purchases less than $1,000
  • Goods or services received in the same income year as they were paid in
  • Prepayment of salary or wages (under a contract of service)
  • Required to be incurred by either: a law of the Commonwealth, a State or Territory (for example, statutory fees or charges payable to a government body such as vehicle registration fees) an order of a court of the Commonwealth, a State or Territory

Some examples of common prepayments are:

  • Rent
  • Airfares and accommodation
  • Subscriptions
  • Contract payments
  • Insurance
  • Advertising
  • Booking for conferences, major events etc.

Recoginising Bad Debts

Businesses should review their debtors prior to 30 June 2019 to determine if there are any debts which will not be paid. These debts should be written off prior to 30 June 2019.

In order to claim a tax deduction, bad debts must actually be written off. It is not sufficient to make a provision for doubtful debts in the business financial statements.

Superannuation Contributions

If an employer pays their superannuation guarantee contributions for the quarter ended 30 June 2019 on  2 July 2019, they will have met their superannuation guarantee requirements, but will not be able to claim
a tax deduction for these contributions in the 2019 tax return. Rather, this deduction will be claimed in the year ended 30 June 2019. To maximise the tax deduction in the year ended 30 June 2019, all superannuation contributions should be made prior to 30 June 2019.

Individuals should also consider their own personal situation, as they may also be able to claim a tax  deduction for personal superannuation contributions made prior to 30 June 2019. These contributions are
referred to as “concessional contributions”. The maximum concessional contributions which an individual is able to make is limited to $25,000 per annum, which includes any employer contributions made on the individual’s behalf. Before making any personal contributions, the individual should contact their employer to determine the contributions which have been made on their behalf, or will be made prior to 30 June.
From 1 July 2017, the requirement that an individual have less than 10% of their income from employment in order to claim a deduction for personal superannuation contributions has been removed, allowing all individuals to claim a deduction regardless of their employment status.

Trustee Resolutions

The trustee of a non-fixed trust should document the exercise of any discretion regarding distributions of  trust income by 30 June 2019 (or any earlier date required under the trust deed) to ensure that beneficiaries are presently entitled to all trust income and therefore ensure that the trustee will not be potentially subject to tax at a penalty rate of 47% in respect of trust income to which no beneficiary has
been made presently entitled. Such distributions should be made in accordance with the definition of trust income set out in the relevant trust deed. Prior to making such beneficiaries present entitled it may
also be prudent for the trustee to determine whether any beneficiaries should be made specifically entitled to capital gains or franked dividends from a tax planning perspective with only the balance of trust
income been distributed to presently entitled beneficiaries. Care should be taken to ensure that any exercise of the trustee’s discretion to make beneficiaries specifically entitled to such amounts is permitted under the trust deed and satisfies all the requirements imposed under the tax law.