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2021 Year End Tax Planning

Posted By Oliluca Accountants  
09/06/2021
19:24 PM

The 2021 financial year is fast approaching an end, there is still time left to minimize your tax obligations. To take advantage of this it’s recommended that you should make an appointment to talk with us before 30 June 2021. By seeking expert advice, you will benefit from a tailored tax planning strategy to suit your specific business needs and individual preferences.

1. Pay employee superannuation now to claim a tax deduction in the 2021 financial year, you need to ensure that your employee’s super payments are received by the super fund or the superannuation clearing house prior to 30th June 2021. You should not pay superannuation payments at the last minutes as processing delay may cause them to be received after year-end which will be deductible in the next year.

From 1st July 2021, the superannuation percentage is set to increase by 0.5% which would make the superannuation guarantee to be 10%. Are you ready for the increase in superannuation guarantee?

2. Uncapped immediate write-off for depreciable assets. Businesses with an annual turnover of less than $5 billion can claim an immediate deduction for the full uncapped cost of an eligible depreciable asset, in the year the asset is first used or is installed ready for use.

3. Defer Income. If possible and appropriate, defer issuing further invoices and receiving cash/debtor payments until after 30th June 2021. This strategy pushes tax payable to future years.

4. Year-end Stocktake and Work In Progress. If applicable, you will have to prepare a detailed stocktake and/or work in progress listing as of 30th June 2021. Please review your listing and write off any obsolete or worthless stock items. Alternatively, call us about your different options for valuing tock and how they affect your tax liability.

5. Write-off Bad Debts. Please review your accounts receivable then write off all bad debts before 30th June 2021.

6. Concessional Superannuation Contributions. Individuals wishing to make contributions up to the concessional cap ($25,000) should do so prior to 21st June 2021. Note that the concessional superannuation contribution includes super contributions from all sources such as super guarantee from employers and personal contributions.

Other Tax Planning Strategies: -

  • Trust distribution minutes
  • Temporary company loss carryback provision
  • Prepay expenses for up to 12 months such as insurances, interest and subscriptions etc
  • Review Division 7a loan agreement arrangements
  • Fringe Benefit Exemption items, the purchase of FBT exempt items for businesses and employees can be an effective way to reduce tax payable
  • Restructure rollover relief to take advantage of the reduction in company tax rates
  • Farm Management Deposits, investing in FMDs can help primary producers to reduce fluctuation in taxable earning caused by economic and seasonal changes to primary production income.