Tax Planning and What You Need To Know

Updated May 19th 2021

Robert Pestana

Tax planning should be done throughout the year but it is always smart to review it at this time of year before 30 June for all businesses. Some areas to consider are:

  • Review business performance
  • Availability of tax concessions, including Instant asset write-off and depreciation
  • Making Super Contributions
  • Timing of Income and Expenses
Review Business Performance

While businesses should continually monitor their performance, it is essential to have up to date data at this time of the year.  This will help the business and the adviser estimate the full-year performance, and likely tax position for the year. It will also facultate opportunities for discussing future planning for the business.

Some of the tax planning considerations for 2021 include:

(i) Instant Asset Write-Off and Depreciation Deductions

In the past 12 months, the government has changed the instant asset write-off and depreciation rules so that they now apply to more businesses.  The instant asset write-off thresholds and aggregate turnover thresholds that apply are as follows:

The government is also allowing small businesses (<$10 million aggregate turnover) to write-off the balance of their small business pool in the 2021 year.

The above can result in significant tax savings in the 2021 year, however, it is critical that the asset is installed and ready for use by the relevant date.

(ii) Making Super Contributions

It is important to remember that in order to claim a tax deduction for a superannuation contribution, the contribution must be received by the super fund by 30 June. Please check with your super fund to confirm the cut-off date for processing June contributions.

It is important for business owners and individuals looking to make additional personal concessional contributions are aware of the superannuation contribution limits for the 2021 year and consider the contributions that have been made already for the year.

The concessional contribution limit is $25,000 for the 2021 year.

(iii) Timing of Income and Expenses

A consideration should be made to determine if any income has been received in advance of provision of goods or services and relates to the net financial year.

Depending on the industry, a review of the supply contract might be required to determine if any income received during the year should actually be carried forward and recognised as income in the next financial year.  It is also a good time to review your accounts receivable list to determine if there are any customers that will not have the capacity to pay and should be written off as bad before 30 June.

Expenses are only tax deductible when incurred and thus accruals and provisions may not be deductible. If there are expenses that can be paid before 30 June, please contact your advisers to consider deductability. If applicable to the business, a review of stock of the business should be done to ensure that any obsolete stock is written off.

The above are just a few areas and examples of tax planning opportunities.  If you want to discuss the tax planning matters for you and your business please contact your CIB Adviser.