Last Minute 2021 End-of-Financial-Year Tax Planning Tips - Quantiphy
 

Last Minute 2021 End-of-Financial-Year Tax Planning Tips

June 2, 2021

With yet another financial year about to end, it’s time to start getting everything in order for the 2021 End-of-Financial-Year. It’s easy to push your EOFY tax planning aside, especially when our focus is still on COVID, but you don’t want to miss the opportunities that EOFY tax planning can present.

There’s still plenty of time to take advantage of EOFY tax planning so continue reading to discover our top tax planning tips for the 2021 End of Financial Year.

Write off Bad Debts

Businesses can reduce their tax bill by claiming a tax deduction for bad debts, claiming a GST repayment. However, you must write off the bad debt amount before the end of the Financial Year to claim it as a deduction.

To claim a bad debt deduction, you must be able to provide evidence that the bad debt is irrecoverable and that it was included in assessable income. You will also need to keep evidence proving your actions to recover the debt.

Keep up to date records

Keeping your financial records up to date is an essential tip for tax planning. Your records should contain all data, including invoices, expenses and deductions, assets, and bank statements.

If you haven’t already started to do so, you won’t want to leave this much longer. 

Know what deductions you can claim

While the accountants at Quantiphy are up to date with 2021 End of Financial Year’s tax deductions, we can only include relevant deductions if you have evidence to support such deductions. 

Utilise the Instant Asset Write-Off

The instant asset write-off concession allows small businesses with an aggregated turnover of less than $500m to claim an immediate deduction for assets costing less than $150,000.

This concession is valid for new and second-hand assets and can be used for more than one asset.

From 7.30pm AEDT on 6 October 2020 until 30 June 2022, temporary full expensing allows a deduction for:

  • the business portion of the cost of new eligible depreciating assets for businesses with an aggregated turnover under $5 billion or for corporate tax entities that satisfy the alternative test
  • the business portion of the cost of eligible second-hand assets for businesses with an aggregated turnover under $50 million
  • the balance of a small business pool at the end of each income year in this period for businesses with an aggregated turnover under $10 million.

Bring forward Expenses/Spending

If you have expenses due in July or August, an excellent strategy to lower this year’s taxes is to bring forward payment to this Financial Year. By pre-paying costs and pay before 30 June 2021, you will reduce your taxable income.

Likewise, if your business needs new equipment or vehicles, purchase them before 30 June 2021, so you can claim deductions this Financial Year.

Defer Income

As per above, by delaying large invoices till 1 July 2021, you will reduce your 2021 taxable income. If you’re on accruals for accounting, you can then delay paying tax on that invoice till the due date of your 2022 tax return which can be as late as May 2023.

Take advantage of personal superannuation limits

All taxpayers under the age of 65 can claim personal superannuation contributions as a personal tax deduction subject to employer SGC support. The annual limit for the 2021 financial year is $25,000 from all sources. No work test is required if you are under 65 although you will need to satisfy a work test in the current financial year if you are between the ages of 65 and 75. 

From 1 July 2021 the annual limit for concessional contributions (deductible) increases to $27,500.00. As these deductions are subject to annual limits we strongly suggest you contact us before making additional contributions to ensure limits are not breached.

Conclusion

With 30 June 2021 fast approaching, there’s no time to waste preparing for 2021 End of Financial Year Tax. Now’s the time to be planning to reduce your taxable income and to avail yourself of any concessions you may be eligible for.

While the highly experienced team of tax accountants at Quantiphy will utilise their knowledge to reduce your taxable income as much as possible, there are messages you can take away to help increase your tax return.

The best tax planning tips we can offer for the 2021 End of Financial Year is to write off bad debts, keep up to date records, know what deductions you can claim, utilise the instant asset write-off, bring forward expenses and spending, defer income where possible and take advantage of superannuation deduction limits if appropriate to your circumstances.

 

 

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

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2020 Quantiphy – Eastern Suburbs, Sydney. All Right Reserved. Website By Omni Online