We have experienced a high inflation economy. Progressive interest rate rises are dampening consumer spending. This has a flow-on impact to businesses – at a time when they are facing extra tax payments due to higher early-year profits, and potentially have lower cashflows.
Managing your business’s tax cashflows in advance, and deferring income to the next year (which could be leaner) will be critical. Strategies to achieve timing benefits and access the closing COVID concessions should also be high on your priority list. For distribution decisions, the ATO’s views in relation to trust distributions and professional profits should be carefully taken into account.
Your Bentleys advisor can assist you to navigate the end of financial year for your business, and help you to get where you want to be.
Following are the top ten EOFY issues we recommend you pay particular attention to.
Top 10 end of financial year issues for 2023
1. Temporary full expensing
Make sure assets are received or completed prior to 30 June 2023 to access this deduction
2. Company loss carry-back
30 June 2023 is the last year for claiming the company loss carry-back. Consider bringing losses forward to 30 June 2023 where possible to access this concession
3. Tax cashflow planning
Forecast forward for future tax payments and reduce PAYG instalments where profits are declining
4. Trust distributions
Consider risk profile and ATO ‘green zone’ examples in relation to making trust distributions within a family group
5. Personal service income
Review personal service income distributions within group in line with ATO guidance and ‘green zone’ examples
6. Research and development
Ensure R&D claims are properly documented
7. Private company loan compliance
Make sure minimum repayments are made
8. 20% additional deduction for digital and training expenditure
Consider which expenses may be eligible for the additional 20% deduction (when enacted)
9. Employee packaging for electric cars
Consider offering employees electric vehicles as part of their remuneration packages
10. Debt deductions and offshore funding
Consider proposed interest deductibility rules due to commence from 1 July 2023 where borrowings are used to funding overseas activities
These top ten items are a few of the key issues your Bentleys advisor will help you with as part of your end of financial year process.
We have also prepared a comprehensive guide to help you step through the different opportunities, how they should be implemented in your group and the future tax cashflow consequences from adopting the strategies.
At Bentleys, we’re here to help you get where you want to be.
Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.
Got questions about end of financial year preparation? Contact us