4 TAX LEGISLATION CHANGES THAT CAN AFFECT YOU THIS FINANCIAL YEAR

There have been several changes during the financial year which may impact your tax position.

As such, if any of the below areas are applicable to you, it makes complete financial sense to be aware of your tax position as well as knowing what you can do to reduce this tax bill and increase your net wealth.

Legislation changes that may impact your tax position include:

1. JobKeeper

Any business that received JobKeeper appreciated the benefit that it had to its cashflow. Unfortunately, those JobKeeper amounts are taxable income. As such, some businesses will have a large jump in profit due to receiving this government stimulus.

2. Cashflow Boost

Cashflow Boost was another government stimulus which any business with employees was eligible to receive.

While this amount was tax-free, if you are operating through a company, and have taken this amount out of the company bank account as dividends, then there will be a tax implication in the shareholder’s name.

3. Instant Asset Write Off/Temporary Full Expensing

This measure, which is in place until 30th June 2022, is aimed at encouraging spending with the benefit of an immediate deduction.

Previously, (before 12th May 2015) this amount was $1,000, however, since then, the threshold has moved to $20,000, $25,000, $30,000, $150,000 and now to no limit.

This tool can be utilised to bring forward a tax deduction to the 2021 financial year if needed.

The above measure can also result in a sub-optimal tax position. If, for example, by doing the above, and purchasing an asset for $120,000, it could actually place your business in a tax loss position.

At the same time, you may have also contributed $25,000 to superannuation and increased the loss for the financial year.

4. Unused concessional cap carry forward

From 1st July 2018, if you had a total superannuation balance of less than $500,000, on 30th June the previous financial year, you may be entitled to contribute more than the general concessional contributions cap and make additional concessional contributions for any unused amount.

This is particularly useful if, in an income year, you have a large taxable income due to a capital gain or bonus or termination payment.

Act Early, Act Now

While the above situations are all designed to be positive for businesses and individuals, there are longer tax implications that may need to be planned for and managed.

Tax planning can help, however, it is only effective if you act ahead of tax time. By undertaking some simple tax planning, now, we can make recommendations that will give you the opportunity to reduce the tax bill and determine your tax position. You’ll be less stressed and will have more time and energy to focus on your business.

“We had the sale of a couple of rental properties during a financial year and we knew we were going to have a large capital gain. With discussions with Cox Sherlock Accountants and our financial planner we were able to structure our affairs in a way which both saved tax and gave us peace of mind as the tax bill was in line with what had been calculated by Cox Sherlock.”

– Shelley, U

Do you want to avoid tax surprises this year?

Contact us today to have a no-obligation discussion about how tax planning can help you.

Individual Income Tax

Preparation of individual Income Tax Returns for wage and salary earners and provision of taxation advice.

Investor Income Tax Returns

Income Tax Returns for rental property owners and larger investors and provision of taxation advice.

Business Financial Statements

Preparation of simple Financial Statements and Income Tax Returns for individual contractors and micro businesses and provision of taxation and commercial advice;

Business Income Tax Returns

Preparation of Financial Statements and preparation of Income Tax Returns for small to medium sized businesses including individuals, partnerships, companies, and Trusts together with provision of taxation and higher level commercial advice.

Business Reports

Business reports involving comparisons with Industry Benchmarks, and analysis of the client's business and comparisons with the Industry Benchmark.

Audit Shield Insurance

Audit Shield Insurance provides for the payment of professional fees incurred by a client when audits, reviews or investigations of lodged returns are initiated by the ATO, Federal and State agencies. The product covers you and your related entities against audit costs from a basic phone enquiry to a complete audit of lodged returns with the ATO, Federal and State agencies. To find out more information, please visit the downloadable reports.