Now is the time to finalise and implement your 2020-21 end of financial year tax plan. With so much financial disruption over the past 12 months, it’s important to make the most of the tax saving measures available to you.

Here we consider a range of matters that can be actioned prior to 30 June that may help you achieve improved cashflow outcomes and avoid unnecessary tax impacts, both in your business and personally.

This year there are a number of opportunities and challenges to take into account. Among them, COVID measures that have been introduced or extended and pending changes to superannuation rules.

Family Assistance
For recipients of the Child Care Subsidy and Family Tax Benefit payments and their partners, your 2019-20 individual tax returns must be lodged by 30 June 2021.  For those who are entitled to Family Tax Benefit but didn’t receive any payments during 2019-20, you will need to lodge a lump sum claim with Services Australia by 30 June 2021.

Catch-Up Contributions
For those who find themselves with surplus cash, it’s possible to boost your super balance this year by contributing amounts that reflect ‘unused’ concessional contribution caps since 2018/19. While there are rules that relate to superannuation balance limits that you’ll need to consider, the catch-up rule will apply for 5 years.

Bring-Forward Contributions
If you have received an inheritance, sold a property or some other type of financial windfall, the 3-year bring-forward rule will allow you to make non-concessional (after-tax) contributions to your superannuation. Currently $100,000 per year, this provides opportunity for you to contribute up to $300,000 in non-concessional contributions to your super this financial year.

New rules from 1 July
There are new superannuation rules coming into effect from 1 July, among them increases to non-concessional contribution caps, bring-forward and the amounts that can be transferred into the tax-free pension phase of your super. Depending on your circumstances, it may be beneficial for you to make contributions now or defer them until after 1 July when the new rules are in place.

Full expensing of new and second-hand assets
Businesses with an aggregated turnover of less than $5 billion can immediately deduct the business portion of the cost of eligible new depreciating assets. Further, businesses with an aggregated turnover of less than $50 million, temporary full expensing applies to the business portion of eligible second-hand depreciating assets. Businesses can also immediately deduct the business portion of the cost of improvements to eligible depreciating assets. Strict conditions apply.

Loss carry back offset
Introduced in 2020, this measure is available to Australian businesses that have an aggregate annual turnover of less than $5 billion. Businesses can elect to carry forward financial years 2020-22 tax losses under the current rules. There are conditions that must be met, and it’s for this reason we encourage early advice. As part of the May Federal Budget, the Government announced its intention to extend this measure by a further 12 months.

There are a range of tax strategies that can help you to minimise your tax so that you only pay what you are legally obligated to pay. Listed below are a number of other discussion points that I’d be pleased to talk through with you.

  • Salary sacrifice to top-up super and make the most of concessional contributions caps
  • Government super co-contributions
  • Increases to the Transfer Tax Free Pension Phase and what this could mean for you
  • Pre-paying interest on loans to achieve tax effective outcomes
  • COVID-19 related tax matters
  • Other general tax planning considerations

Time is of the essence. To take advantage of the tax saving opportunities that may be available to you, I encourage you to contact me as soon as possible so that plans may be formulated and implemented in time.

To discuss your end of financial year tax options, please contact Rosenfeld Kant on (02) 9375 1200 or email gary@roskant.com.au,  raul@roskant.com.au or  elias@roskant.com.au

Partnering with you to deliver efficiencies, growth and success for your business.

The information (including taxation) contained within this article is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Rosenfeld Kant strongly suggest that no person should act specifically on the basis of the information in this document but should obtain appropriate professional advice based on their own personal circumstances.