2024 has seen continued inflationary pressure on individuals and businesses with wage price, interest rates and other cost pressures eating into real profits, and limited relief as nominal income levels push into higher tax brackets.
The ATO has also become less lenient on businesses struggling with cashflow issues, which is forcing individuals and businesses to look closely at budgets – and minimising discretionary spend to fund an increasing tax burden.
The Stage 3 tax cuts have been watered down, but still represent an opportunity to alleviate some of these issues caused by bracket creep. Taxpayers will be looking at ways to defer income and bring forward deductions to access the lower rates.
We have prepared below a list of the top ten EOFY issues we recommend you pay particular attention to, and also a comprehensive downloadable 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.
Your Bentleys advisor can assist you to navigate the end of financial year, and help you to get where you want to be.
Top 10 EOFY issues for 2024
| Issue | Action |
|---|---|
| 1. $20,000 instant asset write off and energy incentive | The federal budget has announced two additional concessions for businesses which will provide a benefit in the 2024 financial year: - $20,000 asset write-off for small businesses with turnover less than $10 million (1) ; and - 20% bonus deduction for up to $100,000 energy efficiency spend for businesses with turnover less than $50 million. |
| 2. Tax cashflow planning | Forecast forward for future tax payments and reduce PAYG instalments where profits are declining. |
| 3. Trust distributions | Consider future receipt of funds by beneficiaries and whether trust distributions are consistent with this. |
| 4. Personal service income | Review personal service income distributions within group in line with ATO guidance and ‘green zone’ examples. |
| 5. Research and development | Ensure R&D claims are properly documented. |
| 6. Private company loan compliance | Make sure private company loans are identified and minimum repayments are made. |
| 7. Small business skills and training boost | Consider which expenses may be eligible for the additional 20% deduction for skills and training expenditures. |
| 8. Employee packaging for electric cars | Consider offering employees electric vehicles as part of their remuneration packages. |
| 9. Debt deductions and offshore funding | Consider change to thin capitalisation rules and impact on interest deductibility. |
| 10. Rental properties | Ensure key issues for rent, repairs and interest deductions are managed and documented for rental property claims. |
| (1) This may be increased to $30,000 asset threshold and $50 million income threshold if Senate amendments are accepted. At the time of writing the House of Representatives have disagreed with the Senate’s amendments with the Senate assisting on the amendments. | |
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.
