25th June 2021   |   Tax

Preparing for EOFY

We understand how busy it can be for everyone at this time, whether you’re a Paye employee, or contractor, Preparing for EOFY  is difficult and that’s why we are here.

Here is a checklist that can assist you in making plans for every EOFY.

Personal tax and investments
  • Summary of income and expenses: Have your Profit and loss ready, with actual figures against each item. Include GST inclusive or exclusive, and calculate the gross profit, total expenses, and net profit.
  • Work-related expenses: Combine all your work-related expenditures, including work from home hours, self-education and professional development expenses, and work-related subscriptions and memberships.
  • Motor vehicle deductions: You can claim for motor vehicle expenses if it’s used for work duties, ensuring your logbook is up to date and you use the cents-per-kilometre method.
  • Pre-pay interest: Repay your margin loans and geared investments in advance. This tax strategy of loan interest can normally be claimed on tax.
  • Pre-pay deductible expenses: Some expenses such as annual income protection premiums, insurance, rebates, and licenses can also be prepaid, allowing a tax deduction for the current tax year.
  • Share portfolio: If you have shares that can be sold at a loss, this will help reduce your capital gains tax.
  • EOFY statements for investments: Once you have received all your EOFY statements that you receive after 1 July, use this to plan your financial situation.
  • Personal super contributions: You may be eligible to claim a tax deduction for personal contributions up to the concessional contributions cap of $25,000, which includes all employer contributions. You may also be eligible to make additional personal contributions from your after-tax salary up to the non-concessional contribution cap of $100,000.
  • Super co-contributions: Low to middle-income earners who make personal (after-tax) super contributions may be eligible to receive a government co-contribution of up to $500. The amount you receive depends on income and how much you contribute and will be automatically calculated and paid by the government.
  • Employer salary sacrifice: Putting some of your pre-tax income into superannuation can have significant tax benefits. Your super fund will tax these contributions at 15 per cent, which may be lower than your marginal tax rate. The end of the financial year is a good time to review your salary sacrifice arrangements for the new financial year to ensure you don’t exceed the reduced concessional cap of $25,000.
  • Spouse contributions: If you make contributions to your spouse’s super fund you may be able to claim an 18 per cent tax offset through your tax return. The maximum tax offset is $540. To be eligible, you must contribute a minimum of $3,000 and your partner’s annual income needs to be $37,000 or less.
  • Supplier invoices: Ensure all suppliers have invoiced you by June 30. Corporate entities are entitled to a deduction where the goods and services have been supplied during the financial year, even if the invoice has not yet been paid.
  • Depreciation: Examine your depreciation schedule and see if any assets require writing off. Assess the effective life of assets (how long they can be used to produce income) to determine if they should be reallocated to a low-value assets pool to be depreciated for the life of its value.
  • Staff bonuses: Bonuses determined and approved before the end of the financial year as unconditional and payable can be deducted in the current financial year.
  • Government-related payments: You must report all government-related payments, including grants, Job Keeper, and COVID-19 payments in your tax return. For sole traders, this is to be included as a business income in your individual tax return. Partnerships, trusts, and companies should report these payments in the partnership, trust, or company tax return.
  • Single Touch Payroll (STP): Before you finalise the declaration in STP-enabled software, clean up any anomalies and ensure all information is correct. You should check that employee information is accurate and that you are addressing overpayments, calculating super, and paying employees correctly.
  • Temporary full expensing and loss carryback: Temporary full expensing allows eligible businesses to deduct the business portion of the cost of eligible depreciating assets bought after October 6, 2020. Under loss carryback, eligible corporate entities can receive a refundable tax offset if they choose to carry-back tax losses made in the 2019-20 or 2020-21 financial years against tax paid for the 2018-19 or 2019-20 financial years.

Speak to the professionals at AX3

At Ax3 we help individuals and businesses maximise their tax positions. Our Advisory firm specialises in tax, superannuation, financial management and other investments.

For more information please contact our friendly team on (03) 9995 7261 or send us an email at info@Ax3.com.au

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