30 June 2022 Tax Time is coming

30 June 2022 Tax Time is coming

Tax Tips

With 30 June coming, here are some reminders and all important tax tips that you may be able to implement before the end of the financial year to minimise your tax bill or maximise your tax refund.

For small business

  • If your cash flow allows, making purchases of consumables and other deductible expenses (including services such as repairs) will further reduce your tax liability.
  • This also applies to pre-payments for relevant expenses by 30 June (e.g. insurance, rent and interest payments).
  • By claiming expenses that have been “incurred” but not paid by 30 June, businesses operating on an accruals basis are able to get certain deductions for these. Such expenses include staff bonuses, directors’ fees, and repairs and maintenance, as long as your business is “definitely committed” to paying these.
  • Review your unpaid customer invoices, and make any decision to write off bad debts before 30 June to claim a tax deduction for the bad debt.
  • Small businesses looking to buy plant and equipment could consider bringing forward the purchase to take advantage of the temporary full expensing rules which have been extended to 30 June 2023. Note: this includes second-hand assets for businesses with a group turnover of less than $50M.
  • Pay superannuation contributions before 30 June to get a tax deduction this financial year.
  • The company tax rate for base rate entities for 2021-22 is now 25%.
  • If you have employees, make sure you finalise their Single Touch Payroll information for 2021–22 by 14 July. Let your employees know when you’ve finalised, so they can lodge their income tax returns.

For individuals

  • Claim all your work-related deductions which may include uniforms and protective clothing, working from home, employment related mobile phone and internet costs, subscriptions and union fees, travel expenses between worksites (but not the commute to and from home), self education expenses
  • COVID-19 payments – if you received a disaster payment it is exempt from income tax and not reported in your tax return. If you received a pandemic leave payment it must be included in your tax return.
  • Deduction for COVID-19 tests – you can claim a deduction for costs you incurred for COVID-19 tests used for work related purposes, such as to determine whether you could attend or remain at work. You can’t claim a deduction for any tests used for private purposes.
  • Consider making a donation to a charity that has Deductible Gift Recipient (DGR) status.
  • Primary producers – one of the best tax planning measures available is the farm management deposit scheme which allows primary producers to deposit up to $800,000 into an FMD account provided various conditions are met. A tax deduction is available for any eligible amounts deposited into an FMD account.

For property investments

  • If you are renting out a whole or part of a property, you will need to declare the income. The ATO data matches income reported by property managers, rental bond authorities and sharing economy platform providers.
  • Landlords can claim deductions for a range of expenses such as interest on investment loans, land tax, council and water rates, body corporate charges, repairs and maintenance and agents’ commissions. Make sure you keep evidence of each deduction that you intend to claim. This could be in the form of invoices, receipts, bank and credit card statements, lease agreements, or other suitable documentation. A good tip is to check your rental expense receipts against your bank and credit card statements to ensure that all rental expenses are captured. It also helps to keep separate accounts for your investments to make record keeping and tax time much easier.
  • Landlords may be entitled to claim depreciation for the declining value of assets such as stoves, carpets and hot-water systems. They may also be able to claim a deduction over a number of years for capital works, such as re-modelling a bathroom.
  • Residential landlords cannot claim travel deductions relating to inspecting, maintaining or collecting rent for a rental property.
  • The ATO has information on holiday homes, renting out part or all of a home and holiday apartments in commercial residential properties, as well as their Tax time toolkit for investors.

Cryptocurrencies and digital assets

  • If you invest in cryptocurrencies you may need to report your gains and losses to the ATO and pay tax on any net capital gains when you sell or gift, trade or exchange, convert to fiat currency (ie AUD), or use it to obtain goods or services.
  • The ATO now matches data from digital exchanges, so it is imported that cryptocurrency gains and losses are correctly reported.
  • Different rules apply for businesses.

Get in touch with any queries.