Tax Planning Tips 2019/20 – Plenty of Options
With June 30 fast approaching we draw your attention to tax planning opportunities for financial year 2019/20 before it is too late.This financial year is different to prior financial years because of
- extra Covid 19 stimulus measures
- deferral of the Federal Budget from May 2020 to 6 October 2020. Incentives that have been renewed in previous years Budgets in May for 1 July will most likely end on 30 June 2020 as they will not be renewed in time.
The most important tax planning considerations are:
- Accelerated Depreciation The threshold for the immediate write off of small business assets was raised from $30,000 per asset to > $150,000 per asset on 12 March 2020. This threshold has since been extended to 31 December 2020.
If you are planning to buy equipment or changeover vehicles we recommend that this be
done by 31 December 2020. Please note that the luxury car threshold of $57,581 applies
to depreciation of cars.
Assets over the relevant asset threshold will be able to be depreciated at accelerated
rates (57.5% for such assets bought between 12 March 2020 and 30 June 2021).
- Superannuation Contributions The tax deductible superannuation contribution limit or cap is $25,000 per year. Superannuation contributions are an effective tax saving strategy as the rate of tax on superannuation is relatively cheap.
From 1 July 2018 superannuation members with account balances less than $500,000
can make “catch up” concessional superannuation contributions in subsequent years.
The 2019/20 year is therefore the first financial year in which you can make a catch up
of contributions over and above the $25,000 if you did not make the maximum
contribution in 2018/19.
To be tax deductible for 2019/20 the contribution must be made and received by the Fund
by 30 June 2020.
- Home Office Expenses – New. The Tax Office are expecting extra claims for home office expenses in 2019/20 due to Work from Home (WFH) protocols during Covid 19.
We suggest that you keep a calculation of hours worked from home in 2019/20. Claims
that we expect to be extra include: home telephone and internet, stationery, computer
equipment and printers and home office equipment. Please note that the ATO allows
80c/hour from 1 March 2020 as a shortcut claim for running expenses. Please keep
records to confirm your claim.
- Capital Gains Tax (CGT) Planning. CGT pertains to profits/losses on the disposal of investment assets. CGT crystallises at the date a contract is signed (rather than settlement date). We believe that 2019/20 CGT planning includes:
- realising CGT losses prior to 30 June 2020 to offset other gains made earlier in the 2019/20 financial year (if applicable).
- deferring the CGT on a transaction by signing a contract in July 2020 rather than June 2020.
- checking for eligibility of CGT small business concessions prior to entering into a CGT business transaction.
Other Tax Planning Tips for 2019/20
- Can income for June 2020 be deferred to July 2020?
- Can expenses for July 2020 be brought forward to June 2020?
- Do you have any obsolete stock to write off before 30 June 2020?
- Do you have any doubtful/bad debts currently to credit in 2019/20?
- Do you have a Division 7A loan to manage prior to 30 June 2020?
- Do you need help/a review of your business structure – setting up a company; discussing Trust beneficiaries?
Please contact us at hello@mccarthy.com.au to arrange a Tax Planning appointment or Zoom phone meeting in the coming weeks.
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