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With the end of the 2021 financial year fast approaching, our annual tax planning strategies are provided for your consideration.

These strategies will assist you in improving your knowledge, deepen your understanding and discover any untapped financial opportunities. 

Please contact us at info@alkfinancialgroup.com.au or on 03 9808 7377 to find out how we can assist you to optimise your year end tax results.

  • Superannuation Contributions – Ensure that all payments are made on time and that the nominated Superannuation Fund receives the relevant funds prior to 30 June to claim a tax deduction.
    • Personal Contributions: The concessional (deductible) limit for superannuation is generally $25,000. The fund will need to be notified of the deduction and the individual should receive and retain confirmation with their tax records.
    • You may also be eligible to make additional personal contributions if you carry forward unused contributions from FY2019 and FY2020. Please contact us to assist you in calculating the additional amount that you may be eligible to claim.
    • Super co-contributions: Low to middle-income earners who make personal (after-tax- super contributions), may be eligible to receive a government co-contribution of up to $500.
    • Employer salary sacrifice: Salary sacrifice from your pre-tax income into superannuation will reduce your taxable income and hence your overall tax payable position. This will be the case as the super contributions will be taxed at 15% while your marginal tax rate will be higher.
    • Care should be taken that you do not exceed the $25,000 concessional contribution cap.
    • Spouse contributions: Provided your spouse’s annual income does not exceed $37,000, you may make a spouse super contribution – minimum $3,000.  You will then be able to claim an 18% tax offset with a maximum available offset of $540.
  • Prepayment of Expenses – Ensure all prepayments are made prior to year end in order to claim a tax deduction i.e. interest on investment loans, insurance premiums etc.
  • Donations – Pay and receipt any donations prior to 30 June in order to bring forward the tax deduction.
  • Motor Vehicle(s) and Logbooks – Make sure that your vehicle log book(s) properly reflect business travel arrangements and adjustments are made for the COVID-19 period – taking into account any lockdowns etc. Ensure you take the odometer reading of your motor vehicle(s) at 30 June.
  • Defer Asset Sales – If you are thinking of selling a profitable asset this financial year, defer the sale contract until after 30 June in order to defer paying Capital Gains Tax etc.
  • Travel Expenditure – COVID-19 had a large impact on travel – both domestic and international. The ATO will be focusing on travel expenditure in FY2021, particularly for employees who are living away from home rather than travelling for work.
  • Working from Home Deductions – If you were working from home during the COVID-19 period, it is expected that home office claims will be higher. Consider whether the ATO short-cut 80 cents per hour method or the 52 cents per hour with actual expenses for related home office and internet costs, will result in a more favourable home office claim.
  • Rental Property Expenses –
    • Ensure that all your property investment expenses are well documented with valid tax invoices and receipts – particularly as it relates to repairs and maintenance, gardening, pest control etc.
    • Depreciation: Building costs of a rental property and depreciation on new assets may be additional non-cash costs you can claim against your rental property. If you do not have a Depreciation Report for your rental property, please contact us as soon as possible to arrange this prior to 30 June through our Quantity Surveyor contacts.
    • Interest: Ensure that the deductible interest is properly recorded at 30 June.
    • No ABN – No Deduction: New rules introduced in FY2020 where if a supplier does not supply an ABN and the property owner does not withhold tax, no tax deduction will be available for the outgoing. This may include ‘cash-in-hand’ repair work on your property.
  • Private Health Insurance (PHI) – Check the rebate you are receiving from your Private Health Fund is correct.
    • If you do not have PHI, consider taking out an eligible private insurance policy in order to save paying the 1% – 1.5% Medicare Levy Surcharge of your income in future years.
  • Other Expenses – Ensure all expenses i.e. stationery, subscriptions, training courses/seminars, marketing material etc are purchased prior to 30 June in order to claim a tax deduction.

ATO and SRO Audit Activity

Please note that the Australian Taxation Office (ATO) and State Revenue Office (SRO) are constantly increasing their audit activities.

There has been an increased audit activity from the ATO, in relation to the following:

Work Related Expenses – Including Travel, Motor Vehicle, Home Office etc.

Rental Property Expenses – Deductible Interest, repairs and maintenance etc.

There has been an increased audit activity from the SRO, in relation to the following:

Land Tax – Principal Place of Resident’s exemption (PPR), Vacant Residential Land Tax (VRLT), Trust Surcharge etc.

Payroll Tax – Detecting employers whose total wages exceed monthly exemption levels and who have not registered for payroll tax;

Auditing specific compliance issues, such as inclusion of grossed up fringe benefits, superannuation, directors’ fees, management fees, grouping, contractors, employment agents, financial planners and employee share acquisition schemes etc;

We can offer a review of your records and record-keeping procedures if you are concerned about your ability to satisfy an audit – should you be selected.

Record Keeping Essentials

It is important that you keep all your tax records in order. Review receipts, log books and other documentation to ensure that all records required to manage your tax affairs are maintained. This will help make the end of financial year process run as smooth as possible.

Please ensure that all your records are maintained for a minimum of five years from the date you lodge your tax return.

Disclaimer

This information is provided by Arthur Kyriacou & Co. for educational purposes. It does not take into account your objectives, financial situation or needs and you should consider whether it is appropriate for you. In deciding whether to acquire or continue to hold an investment, you should consider the relevant product guide or product disclosure statement.

We recommend you obtain financial, legal and taxation advice before making any financial investment decision.

Arthur Kyriacou & Co. will not be liable for any losses arising from reliance on this information.

 

Download your Year-End Tax Planning Checklist here