2024 End of Year Tax Planning

End of Financial Year

In a previous article (see here), we discussed the ideal timing for tax planning.  It is crucial to regularly assess your business performance and implement strategies that optimise tax outcomes.  We recommend conducting a minimum quarterly review of your business to allow ample time for the implementation of growth and tax-related strategies.

If you haven’t yet reviewed your business performance and tax outcomes for this financial year, now is your final opportunity to make a difference before 30 June.

When we engage in end of year tax planning for our clients, we begin by evaluating their year-to-date performance.  This analysis provides insights into their projected financial position at year-end and estimates their tax liability for the year.

Outlined below are some key tax planning ideas for 2024, along with upcoming changes that will come into effect on 1 July 2024. 

Remember, there is still time to schedule an end-of-year tax planning meeting with us.

Depreciation of assets


Small Businesses (Aggregated turnover < $10 million)

Between 1 July 2023 and 30 June 2024, the 2023-24 Budget, the Federal Government announced that small businesses with an aggregated turnover of less than $10 million can claim the instant asset write-off for assets acquired for less than $20,000.  This was extended to 30 June 2025 as part of the 2024-25 Federal Budget.  However, the legislation for this $20,000 threshold has not yet been passed. 

Assets valued at more than $20,000 can be added to a small business depreciation pool and depreciated at 15% in the first year and 30% thereafter.

Without legislation passing, the threshold for immediate deduction of assets if $1,000.

Large Businesses (Aggregated turnover > $10 million)

For businesses with an aggregated turnover above $10 million, a deduction can be claimed for depreciation of assets based on their effective life.

EOFY Tax tip: If you are looking to acquire capital assets for your business, we recommend doing so prior to 30 June.  You may be eligible for an instant asset write-off or, if not, a deduction for depreciation.

Business tip: If you have sold an asset that you have previously written off, the sales proceeds are assessable income in full, in the year of sale.

Business tip: The tax depreciation deduction is only available once the asset is installed and ready for use.  Getting assets installed and ready for use by 30 June might be difficult for some businesses given the current lack of supply for equipment and vehicles.

Employee super

The June quarter superannuation guarantee liability is required to be paid by 28 July.  However, a business can only claim a tax deduction for employees’ superannuation when it is actually paid.  As such, to ensure you get a deduction in the current year, you need to pay your employees’ June superannuation guarantee liability prior to 30 June (cashflow permitting).  We recommend that the payment be made by 20 June (to ensure it is received and processed by the recipient superfund). 

EOFY Tax tip: Pay your employee June quarter superannuation by 20 June to get a deduction in the current financial year.

Business tip: The ATO are currently allocating considerable resources to reviewing employer compliance with paying employees’ superannuation guarantee.  There are significant penalties that apply if you pay your employee superannuation late. 

Business tip: The payment of your June quarter superannuation liability does not impact on your profit and loss position (as the superannuation liability has already been recorded in your profit and loss).  The payment before 30 June simply brings the tax deductibility of the payment forward to the current financial year.  If you make the payment after 1 July (and before the 28 July cut-off), the payment will be deductible next financial year.

Business tip: From 1 July 2024, the superannuation guarantee rate increases to 11.5%.  This will continue to increase by 0.5% per year until it reaches 12%.  This will have flow-on implications for payroll tax, workcover etc. 

Personal superannuation

You may also want to make personal contributions to super.  For the 2023/24 financial year, the maximum concessional (deducted) contribution cap is $27,500.

However, if your superannuation balance was less than $500,000 as at 30 June 2023, it may also be possible for you to contribute more super by taking advantage of the unused concessional cap carry forward rules (read our article to find out more).  You have until 30 June 2024 to make contributions to catch-up on the 2019 carried forward concessional cap.

EOFY Tax tip: If you have unusually high income during the 2024 financial year, consider whether making additional deductible superannuation contributions fits within your personal financial plan.  We recommend speaking with your financial adviser regarding your superannuation contributions.

Trade debtors

You should review your trade debtors as at 30 June.  You must ensure that any debts that are uncollectible are written off prior to 30 June in order to claim a tax deduction for the write-off in the current financial year. 

EOFY Tax tip: To write off a bad debt – you must have made reasonable and commercial attempts to recover the debt and have now determined it is uncollectible.  You then need to make a decision in writing to write off the bad debt (eg. you have removed the debt from the customer’s account and have recognised a bad debt expense).

Prepay or bring forward your expenses

Make sure you review all of your expenses and bring forward any expenses to June (where possible).  For example, stock up on stationery and office consumables, prepay your insurance and interest (if applicable) and look at any other expenses you may be able to pay in June.  By bringing these expenses forward to June, you are obtaining a tax deduction in the current financial year which will reduce your overall tax bill for the 2024 year.

EOFY Tax tip: If your business is in a loss position, it may not be advantageous to bring forward expenses to the current financial year.  Please contact us to discuss whether this strategy is appropriate for you.

Defer assessable income

Consider whether it is possible to defer your assessable income (being mindful of cashflow implications) to next financial year. 

Motor vehicles

If you are using a vehicle for a high percentage of work-related travel, make sure you keep a logbook.  Without a logbook, an individual is limited to claiming a maximum of 5,000km at $0.85 (or $4,250) in the 2024 financial year.  If you keep a logbook, you can claim the business percentage of the operating costs of the vehicle (petrol, registration, servicing, depreciation, interest etc).

Logbooks must be kept for 12 continuous weeks and remember to record your vehicle’s opening and closing odometer readings each year.

EOFY Tax tip: A logbook started prior to 30 June can be used to support a logbook claim even if the logbook isn’t completed until after 30 June.

Working from home

If you worked from home during the 2024 financial year, you may be able to claim a deduction for a percentage of the running costs of your home.  There are two different methods you can use to calculate your deduction:

(1) Revised Fixed-Rate method ($0.67 per hour) – this method covers electricity, internet, mobile and home phone, stationery and computer consumables.  It does not cover depreciation of office equipment.  If you are using this method, you must have a diary of your actual hours worked from home.

(2) Actual cost method – you can calculate and claim the work-related portion of your actual expenses provided you have kept appropriate records.

For more information about your working from home deduction – see our earlier article.

EOFY Tax tip: You must have a diary to record your hours working from home.  If you do not have diary evidence, we cannot claim a deduction for these hours.

EOFY Tax tip: The ATO will be specifically reviewing deductions for working from home during the 2024 year.  Ensure you have appropriate documentation for your hours and you are not claiming twice (eg. by claiming the rate per hour ($0.67) plus a deduction for your phone).

Trust minutes

Prior to 30 June, make sure the trustees of your discretionary trusts decide how they are going to distribute their income and capital.  This decision must be documented in a trust minute before 30 June (or as otherwise specified in your trust deed).  It is important that you review your trust income for the 2024 financial year to ensure that the trust minute accurately reflects the trustee’s intention.  Given the recent announcements from the ATO with regards to the distribution of income to adult children and other tax advantaged beneficiaries, it is important that you get tax advice for your end of year tax minutes.

EOFY Tax tip: Your trust minutes must be prepared prior to 30 June to evidence the trustee’s decision regarding the distribution.  Keep this minute with your tax records.

Rental properties

For your rental properties, if you have any expenses coming up in the next few months, try to pay these prior to 30 June – this will bring the deduction into the current tax year and will help you to reduce your 2024 tax bill.

In relation to any interest you are claiming on your rental property, make sure you only claim the interest on the loan that was used to purchase the property.  If you have drawn down on the same loan for private purposes (eg. for a holiday), the interest that relates to the private usage is not deductible.

EOFY Tax tip: Consider getting a depreciation report for your rental property.  You may be able to claim additional tax deductions for the cost of the building and potential its fixtures and fittings.

EOFY Tax tip: Consider undertaking repairs to your property prior to 30 June.

EOFY Tax tip: Rental property deductions are being specifically reviewed by the ATO during the 2024 year.  Make sure your rental expenses are correct and that you have appropriate supporting documentation.

Cryptocurrency

It is important to ensure you include all cryptocurrency transactions on your tax return.  If you have had any cryptocurrency gains in the current financial year, you may wish to consider some additional tax planning measures before 30 June to reduce any tax liability.

EOFY Tax tip: Make sure you have all of your documentation available for all cryptocurrency transactions.  Noting that changing your investment from one cryptocurrency to another constitutes a transaction which may result in a tax liability. 

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore, it should be regarded as confidential and not be made available to any person without our consent,

Navigating FBT at Christmas Time

Navigating Fringe Benefits Tax at Christmas

 

Fringe Benefits Tax (FBT) is a tax that employers pay for non-cash benefits they provide to their employees.  Rather than taxing the employees on these benefits, the employer pays fringe benefits tax.

Christmas provides employers with a great opportunity to reward their staff.  Understanding the key FBT considerations during Christmas time is crucial to avoid potential pitfalls and optimise tax outcomes.

Christmas parties

Hosting a Christmas party is also a great way to celebrate the end of the year.  However, there may FBT implications associated with the party.

The costs associated with Christmas parties (for example, food and drink) are exempt from FBT if they are provided on a working day on your business premises and consumed by current employees. 

Alternatively, if you hold your Christmas party away from your business premises, the party will be exempt if it costs less than $300 per employee.

Christmas presents

Gifts that are given to employees can attract FBT.  However, if the value of the gift is below $300 per employee, it is exempt. 

Tax deductions and GST

You can only claim a tax deduction and GST on benefits that are subject to FBT.  So, if the benefits you are providing to your employees (gifts and/or Christmas party) are under $300 and exempt from FBT, they will not be tax deductible nor can you claim any GST on the cost.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Small Business – Queensland Grant

Small Business Boost Grants Program

Queensland

 

The Queensland Government have released a new Small Business Grant that opens at 9am on 6 September 2023.

The Grant provides funding between $10,000 and $20,000 for eligible projects.  Applicants must contribute an equal amount to the funding requested under the grant.

The Business Boost grants assist small businesses to enhance their efficiency and productivity.  Specifically, it is aimed at funding 3 project areas:

  1. Future planning
  2. Specialised and automated software
  3. Planning and systems for staff management and development.

For more information about the grant, please refer to the Business Queensland website.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Small Business Technology Investment Boost

Small Business Technology Investment Boost

Legislation was passed on 23 June 2023 to enable small businesses to claim an additional 20% deduction for eligible technology expenditure.

What is the boost?

Small businesses (who have an aggregated turnover of less than $50 million) will be able to claim an additional 20% deduction for expenses incurred to support their digital operations.

The boost is available for expenditure incurred between 29 March 2022 and 30 June 2023 and is capped at $100,000 per income year.  The maximum bonus deduction is $20,000 per income year.

Eligibility

To be eligible for the additional deduction, you must meet the following conditions:

  1. You have an aggregated turnover of less than $50 million for the income year in which you incur the expenditure;
  2. The expenditure is “eligible expenditure” (see below);
  3. The expenditure is deductible for your business under Australian tax law;
  4. The expenditure has been incurred between 29 March 2022 and 30 June 2023.

Eligible expenditure

Eligible expenditure may include (but is not limited to):

  • digital enabling items;
  • digital media and marketing;
  • e-commerce;
  • cyber security.

At the end of this article we have included a table of example expenditure that may be eligible for the boost.

What cannot be claimed?

You cannot claim the following expenses towards the boost:

  • Salary and wages
  • Capital works costs
  • Financing costs
  • Training or education costs (but these may be eligible for the Small Business Skills and Training Boost)
  • Expenses that form part of your trading stock.

Cap on the deduction

There is an annual cap of $100,000 on eligible expenditure (with the bonus deduction capped at $20,000).

When do you claim the deduction

For any expenditure incurred between 30 March 2022 and 30 June 2022, you claim 100% of the deduction in the 2022 tax return and the 20% bonus in the 2023 tax return.

For any expenditure incurred between 1 July 2022 and 30 June 2023, you claim both the 100% deduction and the 20% bonus in the 2023 tax return.

What do you need to do?

To check your eligibility for the boost, we recommend you take the following steps:

1. Review your technology expenditure from 29 March 2022 to 30 June 2023;

2. Identify any expenditure that has been incurred to help digitise your business;

3. If you use online accounting software, attach a copy of the invoice to the transaction in your software;

4. Provide us (your accountant) with the details of all relevant costs incurred that meet the eligibility criteria.

Provided we have the relevant documentation to prove eligibility to the boost, we will claim the additional 20% deduction in your tax return.

Please do not hesitate to contact us if you would like further information about the boost.

Examples of Possible Eligible Expenditure

Category

Example expenditure

Digital enabling items

Computer and telecommunications hardware

  • Desktop and laptop computers
  • Digital tablets
  • Computer keyboards
  • Webcams
  • Computer mouse, trackpads, stylus
  • Computer cables
  • Powerpacks
  • Electrical and power adapters
  • Repairs and improvement costs to computer hardware and equipment

Digital enabling items

Telecommunications hardware and equipment

  • Landline phones
  • Mobile phones
  • Smart watches
  • Telephone accessories
  • Repair and maintenance costs

Digital enabling items

Software

  • Initial purchase
  • Annual subscriptions (eg. accounting software subscriptions, Office 365, anti-virus, ServiceM8)

Digital enabling items

Internet

  • Usage costs
  • Connection costs
  • Repair costs

Digital enabling items

Computer systems

  • Subscriptions to support digital capabilities
  • Help desk support fees and charges
  • IT support charges
  • Repairs and improvement costs

Digital media and marketing

  • Audio and visual content creation
  • Web page design
  • Web page update costs
  • Search engine optimisation fees
  • Email marketing fees
  • Photo stock fees
  • Music royalty fees

E-Commerce

  • E-commerce website setup
  • E-commerce website optimisation
  • Setup of social media store functionality
  • Costs associated with setting up online methods of payment
  • Photography costs for online display
  • Photostock fees
  • Portable payment devices
  • Digital inventory management
  • Subscription to cloud-based services
  • Advice on digital operations

Cyber Security

  • Cyber security consultant fees
  • Cyber security software (eg. anti-virus)
  • Cyber security installation and implementation costs
  • Cyber security backup management
  • Cyber security monitoring services

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Small Business Skills and Training Boost

Small Business Skills and Training Boost

Legislation was passed on 23 June 2023 to enable small businesses to claim an additional 20% deduction for expenditure on staff training.

What is the boost?

Small businesses (who have an aggregated turnover of less than $50 million) will receive an additional 20% deduction for expenditure on external training courses delivered to employees by registered training providers.

The additional deduction will apply to expenditure incurred between 29 March 2022 to 30 June 2024.

Eligibility

To be eligible for the additional deduction, you must meet the following conditions:

  1. You have an aggregated turnover of less than $50 million for the income year in which you incur the expenditure;
  2. The training is provided to employees of your business (the boost does not apply to training provided to sole traders, partners in a partnership or independent contractors);
  3. The training is provided either in-person in Australia or online;
  4. The training is provided by a registered training organisation that is not you or an associate of yours – you can check here for registered providers: https://training.gov.au/
  5. The expenditure is deductible for your business under Australian tax law;
  6. The expenditure has been incurred between 29 March 2022 and 30 June 2024.

Expenses you can claim

The boost applies to expenditure on training and also incidental costs (for example: books or equipment).

When do you claim the deduction

For any expenditure incurred between 30 March 2022 and 30 June 2022, you claim 100% of the deduction in the 2022 tax return and the 20% bonus in the 2023 tax return.

For any expenditure incurred between 1 July 2022 and 30 June 2023, you claim both the 100% deduction and the 20% bonus in the 2023 tax return.

For any expenditure incurred between 1 July 2023 and 30 June 2024, you claim both the 100% deduction and the 20% bonus in the 2024 tax return.

What do you need to do?

To check your eligibility for the boost, we recommend you take the following steps:

1. Review your training expenditure from 29 March 2022 to 30 June 2023;

2. Identify any expenditure that has been provided by a registered training provider (refer: https://training.gov.au/)

3. If you use online accounting software, attach a copy of the invoice to the transaction in your software.

4. Provide us (your accountant) with the details of all relevant training costs incurred that meet the eligibility criteria.

Provided we have the relevant documentation to prove eligibility to the boost, we will claim the additional 20% deduction in your tax return.

Please do not hesitate to contact us if you would like further information about the boost.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Payroll EOY Finalisation – Single Touch Payroll

Payroll End of Year Finalisation

Single Touch Payroll

Due 14 July

Employers – you have until 14 July to finalise your end of year payroll through Single Touch Payroll (STP). 

While this may sound like a simple, one step process through your software, you do need to undertake a number of checks at this time to ensure that the information you are lodging is correct. 

We’ve outlined these steps below for you.  If you need help finalising your payroll for the end of financial year, please feel free to book in a time to speak to us.

 

1

Check that all of your bank accounts are reconciled in your accounting software and the bank account balance agrees to the bank statement.

2

Check all of your payruns have been recorded, paid and filed with the ATO through Single Touch Payroll.

3

Check the wages payable account in your balance sheet and ensure that the balance is nil at the end of financial year (which indicates that all payruns have been physically paid).

4

Download the lodged Single Touch Payroll data from the ATO Business Portal to confirm the total gross wages and PAYG withholding.

5

Summarise and total the wages data lodged via your business activity statements (W1 Wages and W2 PAYG withholding).

6

Download the Single Touch Payroll reports from your accounting software and compare the total wages and PAYG withholding to the amounts calculated in steps 4 and 5 above.  The wages and PAYG withholding calculated in steps 4 and 5 should agree to the total wages and PAYG withholding shown in the Single Touch Payroll report from your accounting software.

7

Once you are happy that the data in the Single Touch Payroll report is correct, you can finalise the data in your accounting software and lodge with the ATO via Single Touch Payroll.  The reports are required to be finalised by 14 July.

8

We recommend that once the payroll data has been finalised through Single Touch Payroll, you notify your employees.  Your employees no longer receive individual printed payment summaries.  Once you have finalised the payroll through Single Touch Payroll, your employees can access the finalised data through their myGov accounts or via their tax agent.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore, it should be regarded as confidential and not be made available to any person without our consent,

2023 End of Year Tax Planning

End of Financial Year

In a previous article (see here), we discussed the ideal timing for tax planning.  It is crucial to regularly assess your business performance and implement strategies that optimise tax outcomes.  We recommend conducting a minimum quarterly review of your business to allow ample time for the implementation of growth and tax-related strategies.

If you haven’t yet reviewed your business performance and tax outcomes for this financial year, now is your final opportunity to make a difference before 30 June.

When we engage in end of year tax planning for our clients, we begin by evaluating their year-to-date performance.  This analysis provides insights into their projected financial position at year-end and estimates their tax liability for the year.

Outlined below are some key tax planning ideas for 2023, along with upcoming changes that will come into effect on 1 July 2023. 

Remember, there is still time to schedule an end-of-year tax planning meeting with us.  This will enable us to provide specific advice tailored to your business – click to book in with Jeanette or Troy.

Depreciation of assets

For businesses with a turnover under $50 million, up to 30 June 2023 you can claim a deduction for the acquisition of any eligible depreciating assets (there is no limit for most assets).

For small businesses (turnover under $10 million) that use simplified depreciation rules, the balance of your small business pool can be written off at the end of the income year.

We note that there is still a cost limit on certain assets – for example, you can only claim a maximum deduction of $64,741 for a passenger vehicle during the 2023 financial year.  A passenger vehicle is a vehicle that is designed to carry a load less than one tonne and fewer than 9 passengers.

From 1 July 2023, the depreciation limit changes to $20,000 – this means you can only claim a full deduction at time of purchase for assets that cost $20,000 or less.  After 1 July 2023, any assets that you acquire for more than $20,000 will need to depreciated for tax purposes.

EOFY Tax tip: If you are looking to acquire capital assets for your business, we recommend doing so prior to 30 June to get the deduction in the current financial year.  If the deduction puts your company in a loss position – consider the loss carry-back provisions below.

Business tip: While you get the benefit of deducting the full cost of the asset in the current financial year, this means that you will not receive any depreciation on this asset in future years.  It also means that when you sell the asset, any income from the sale will be subject to income tax.

Business tip: The tax depreciation deduction is only available once the asset is installed and ready for use.  Getting assets installed and ready for use by 30 June might be difficult for some businesses given the current lack of supply for equipment and vehicles.

Company loss carry-back

Companies that make a loss in the 2020 to 2023 financial years, can carry this loss back to reduce taxable profits made on or after the 2019 financial year.  The company can then elect to receive a refund of the tax paid in that year when lodging the later year tax return.

EOFY Tax tip: Your company may be able to take advantage of the asset depreciation rules to write off the full value of new assets purchased.  If the depreciation puts your company into a loss, this loss may be applied against the taxable profits from 2019 to 2022.  You may then receive a refund of tax paid in those financial years.

Employee super

The June quarter superannuation guarantee liability is required to be paid by 28 July.  However, a business can only claim a tax deduction for employees’ superannuation when it is actually paid.  As such, to ensure you get a deduction in the current year, you need to pay your employees’ June superannuation guarantee liability prior to 30 June (cashflow permitting).  We recommend that the payment be made by 20 June (to ensure it is processed by the recipient superfund). 

EOFY Tax tip: Pay your employee June quarter superannuation by 20 June 2023 to get a deduction in the current financial year.

Business tip: The ATO are currently allocating considerable resources to reviewing employer compliance with paying employees’ superannuation guarantee.  There are significant penalties that apply if you pay your employee superannuation late. 

Business tip: The payment of your June quarter superannuation liability does not impact on your profit and loss position (as the superannuation liability has already been recorded in your profit and loss).  The payment before 30 June simply brings the tax deductibility of the payment forward to the current financial year.  If you make the payment after 1 July (and before the 28 July cut-off), the payment will be deductible next financial year.

Business tip: From 1 July 2023, the superannuation guarantee rate increases to 11%.  This will continue to increase by 0.5% per year until it reaches 12%.  This will have flow-on implications for payroll tax, workcover etc. 

Personal superannuation

You may also want to make personal contributions to super.  For the 2022/23 financial year, the maximum concessional (deducted) contribution cap is $27,500.

However, if your superannuation balance was less than $500,000 as at 30 June 2022, it may also be possible for you to contribute more super by taking advantage of the unused concessional cap carry forward rules. 

EOFY Tax tip: If you have unusually high income during the 2023 financial year, consider whether making additional deductible superannuation contributions fits within your personal financial plan.  We recommend speaking with your financial adviser with regards to your superannuation contributions.

Trade debtors

You should review your trade debtors as at 30 June.  You must ensure that any debts that are uncollectible are written off prior to 30 June in order to claim a tax deduction for the write-off in the current financial year.  This is particularly important given the on-going effect of COVID-19 on many businesses.

EOFY Tax tip: To write off a bad debt – you must have made reasonable and commercial attempts to recover the debt and have now determined it is uncollectible.  You then need to make a decision in writing to write off the bad debt (eg. you have removed the debt from the customer’s account and have recognised a bad debt expense).

Prepay or bring forward your expenses

Make sure you review all of your expenses and bring forward any expenses to June (where possible).  For example, stock up on stationery and office consumables, prepay your insurance and interest (if applicable) and look at any other expenses you may be able to pay in June.  By bringing these expenses forward to June, you are obtaining a tax deduction in the current financial year which will reduce your overall tax bill for the 2023 year.

EOFY Tax tip: If your business is in a loss position, it may not be advantageous to bring forward expenses to the current financial year.  Please contact us to discuss whether this strategy is appropriate for you.

Defer assessable income

Consider whether it is possible to defer your assessable income (being mindful of cashflow implications) to next financial year. 

Motor vehicles

If you are using a vehicle for a high percentage of work-related travel, make sure you keep a logbook.  Without a logbook, an individual is limited to claiming a maximum of 5,000km at $0.78 (or $3,900) in the 2023 financial year.  If you keep a logbook, you can claim the business percentage of the operating costs of the vehicle (petrol, registration, servicing, depreciation, interest etc).

Logbooks must be kept for 12 continuous weeks and remember to record your vehicle’s opening and closing odometer readings each year.

EOFY Tax tip: A logbook started prior to 30 June can be used to support a logbook claim even if the logbook isn’t completed until after 30 June.

Working from home

If you worked from home during the 2023 financial year, you may be able to claim a deduction for a percentage of the running costs of your home.  There are two different methods you can use to calculate your deduction:

(1) Revised Fixed-Rate method ($0.67 per hour) – this method covers electricity, internet, mobile and home phone, stationery and computer consumables.  It does not cover depreciation of office equipment.  From 1 March 2023, if you are using this method, you need to have a diary of your actual hours worked from home.

(2) Actual cost method – you can calculate and claim the work-related portion of your actual expenses provided you have kept appropriate records.

For more information about your working from home deduction – see our earlier article.

EOFY Tax tip: From 1 March 2023, You must have a diary to record your hours working from home.  If you do not have diary evidence, we cannot claim a deduction for these hours.

EOFY Tax tip: The ATO will be specifically reviewing deductions for working from home during the 2023 year.  Ensure you have appropriate documentation for your hours and you are not claiming twice, by claiming the rate per hour ($0.67) plus a deduction for your phone for example.

Trust minutes

Prior to 30 June, make sure the trustees of your discretionary trusts decide how they are going to distribute their income and capital.  This decision must be documented in a trust minute before 30 June (or as otherwise specified in your trust deed).  It is important that you review your trust income for the 2023 financial year to ensure that the trust minute accurately reflects the trustee’s intention.  Given the recent announcements from the ATO with regards to the distribution of income to adult children and other tax advantaged beneficiaries, it is important that you get tax advice for your end of year tax minutes.

EOFY Tax tip: Your trust minutes must be prepared prior to 30 June to evidence the trustee’s decision regarding the distribution.  Keep this minute with your tax records.

Rental properties

For your rental properties, if you have any expenses coming up in the next few months, try to pay these prior to 30 June – this will bring the deduction into the current tax year and will help you to reduce your 2023 tax bill.

In relation to any interest you are claiming on your rental property, make sure you only claim the interest on the loan that was used to purchase the property.  If you have drawn down on the same loan for private purposes (eg. for a holiday), the interest that relates to the private usage is not deductible.

EOFY Tax tip: Consider getting a depreciation report for your rental property.  You may be able to claim additional tax deductions for the cost of the building and potential its fixtures and fittings.

EOFY Tax tip: Consider undertaking repairs to your property prior to 30 June.

EOFY Tax tip: Rental property deductions are being specifically reviewed by the ATO during the 2023 year.  Make sure your rental expenses are correct and that you have appropriate supporting documentation.

Cryptocurrency

The ATO have specifically announced that they will be reviewing cryptocurrency transactions in the 2023 tax returns.  It is important to ensure you include all cryptocurrency transactions on your tax return.  If you have had any cryptocurrency gains in the current financial year, you may wish to consider some additional tax planning measures before 30 June to reduce any tax liability.

EOFY Tax tip: Make sure you have all of your documentation available for all cryptocurrency transactions.  Noting that changing your investment from one cryptocurrency to another constitutes a transaction which may result in a tax liability. 

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore, it should be regarded as confidential and not be made available to any person without our consent,

Exit Strategies for Business Owners: Planning your Successful Departure

Exit Strategies for Business Owners:

Planning Your Successful Departure

When is the best time to start thinking about your business exit strategy?  To be honest, it should be before you even start your business.  Before you start your business and invoice your first client or customer, you should be thinking about what you would like to achieve with your business and where you would like it to go. 

But let’s say you’re now several years into running your business and you haven’t even thought about your exit strategy…that’s okay because the second best time to start thinking about your business exit strategy, is today (cue that Chinese Proverb about planting trees…). 

We have been working with a number of clients over the past few years to successfully exit their business.  “Successfully exiting a business” can mean different things to different people, but generally includes:

* Selling for an acceptable price
* Minimising the resulting tax liability on the sale
* Minimising the disruption to the business during the due diligence and negotiation stages, and then the actual changeover
* Getting the right advice on how to best utilise the net sales proceeds.

No business exit is the same as another.  Some of the recent sales we have assisted with involved very different purchasers, we have had:

* A sale to a ASX listed company
* A sale to a private equity group
* A sale to an employee
* A sale to an overseas buyer.

One commonality with each of these sales, however, is that each involved technical legal and accounting advice and involvement to ensure each party was adequately protected and achieved the best outcome.

Your business exit strategy is something that you should think about at least on an annual basis.  We generally have this conversation with each client around tax planning time.  If you haven’t previously done so, spend some time this week thinking about your exit strategy from your business, specifically:

1) What is your exit strategy?  Is it sale to a third party?  Is it a sale to employees? Will your children take over the business?
2) What is your timeframe for exit?
3) Is your business in the best shape to achieve your exit strategy goals?

We recommend that business exit plans start at least 5 years before your proposed exit.  This will give us enough time to help you get your business “sale ready” and ensure it is appropriately structured for the exit you want.

Feel free to book in a time with us to discuss.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Show me the money…how to get your debtors to pay faster

How can I get my accounts paid faster?


We all know that cash is king, especially for small businesses, but how can you improve the cash collection for your accounts receivable (debtors)?

The faster you are paid by your debtors, the faster you can put that money to work for you and your business – so quick debt collection is imperative for a strong business.  You also don’t want to be left with a debtor who suddenly goes out of business and can no longer pay your account.

Here are some tips for you to improve the collection of your debtors:

  1. Invoice promptly after providing the goods / services – where your customer can see the connection between the invoice and the value they have received, they are more likely to pay promptly;
  2. Have clear payment terms – have these stated on your invoice together with the consequences for late or missed payments;
  3. Offer payment options and terms – the easier it is for customers to pay, the more likely they are to pay quickly (most online accounting software packages provide options for you to take payment by credit card with the associated cost being passed on to your customer);
  4. Promptly follow up overdue accounts – keep up-to-date records of your debtors and make sure you promptly follow up on overdue balances (this can be done automatically with most online accounting software);
  5. Maintain good customer relationships – building strong relationships with your customers improves your chances of collecting the debt;
  6. Consider hiring a collection agency – if you have exhausted all other options and are struggling to collect your debt, consider hiring a debt collection agency to assist you.

Not all businesses are suited for providing goods/services on account – you need to consider whether it is appropriate for your business. 

Most accounting software packages give you data regarding your debtors.  You should review this information on a regular basis.  For example, your software should be able to show you:

  • Your current outstanding debtors and the length of time they have been outstanding.
  • The number of days (on average) it takes you to collect your debtors.
  • The amount of your debtors compared to your total sales.
  • The average amount of your debtors over time.

If you find you are making a lot of sales but your cashflow is struggling, it may be because your cash collection is low and you have many outstanding debtors.

We can help you to review the state of your current debtors, as well as provide you with recommendations on how to improve your cash collection from outstanding accounts.  Feel free to book in a time with us to discuss.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.