Year End Tax Tips 2024

1. Personal Tax Rates:
The personal resident tax rates for the 2024-25 year are as follows:
0 to $18,200 Nil
$18,201 to $45,000 16 cents for each $1 over $18,200
$45,001 to $135,000 $4,288 plus 30 cents for each $1 over $45,000
$135,001 to $190,000 $31,288 plus 37 cents for each $1 over $135,000
$190,001 and over $51,638 plus 45 cents for each $1 over $190,000

2. Consider additional Super contribution up to the cap.
Both employees and self-employed individuals can claim a tax deduction for the Financial Year 2024 to a maximum of $27,500 for personal superannuation contributions. If the super contributions made by your employer on your behalf is under the $27,500 limit, if cashflow permits, you can make additional contributions up to the cap and claim the deduction for FY24. To be able to claim a deduction, your super fund should have physically received the contribution by 30 June 2024 and the individual has provided their superannuation fund with a notice of intention to claim. From FY25, the cap will increase to $30,000.

3. Take advantage of Carry Forward unused contribution cap amounts:
If your superannuation balance is below $500,000 as at the previous 30 June, you can contribute more to superannuation than the annual $27,500 deductible contribution cap, where your contributions in prior years were below the concessional contribution cap of that year. Employer contributions are counted for this purpose, and there are contribution and timing limits. You can carry forward unused concessional contribution caps for 5 years from FY2019. Any unused caps from FY2019 that are not used by 30 June 2024 will be lost after that date.

4. Report Income from All Sources
Please note that you will need to report income from sources such as your Salary or Wage, Government Payments, Termination and Redundancy Payments, Online/Sharing/Gig Economy Income, Crypto and Share Capital Gains and Losses, Interest Income, Rental Income, Foreign Income, Personal Services Income and Sole Trader income, etc. in your tax returns.
Failing to include all income when lodging is one of ATO’s key focus areas for this tax time.

5. Work Related Expenses
Ensure you keep a record of all the work-related expenses, so you do not miss out on deductions but please don’t buy any deductibles that you don’t need.
Taxpayers who are over-claiming work-related expenses are on ATO’s hit list again this year. Please always remember the golden rules:
– You must have spent the money yourself and weren’t reimbursed.
– The expense must be directly related to earning your income.
– You must have a record to prove it.
– If there was a private component, you can only claim a deduction for the work-related portion of the expense.
Work-related Expenses continues to remain one of ATO’s key focus areas for this tax time.

6. Motor Vehicle Logbooks
Make sure your motor vehicle logbooks or work-related travel diary is up to date to substantiate any work-related expense deductions. If you claim a tax deduction for work related motor vehicle expenses, you should note your odometer records on 30 June each year so that you can calculate the kilometres travelled. Maintaining a logbook of work-related use of your vehicle will usually maximise the tax deduction you can claim. If your current logbook is 5 years old, you will need a new one for a continuous 12-week period.

7. Working From Home
The ATO has announced changes to the way taxpayers claim working from home deductions. You can use the following two methods to calculate your Work from Home Expenses if you work from home while carrying out employment duties or while carrying on a business during the year:

Revised Fixed Rate Method: The fixed rate of $0.67 cents per hour applies from 1 July 2022 onwards and includes Energy Expenses, Phone usage, Internet, Stationery & Computer Consumables. No additional deduction for any expenses covered by the rate can be included if you use this method. Under the new rules, if you use your mobile phone for work purposes when you are out-and-about, as well as at home, you can no longer claim a separate deduction for this use and still use the fixed rate method. If you wish to claim actual use of your mobile phone (or home internet), you must claim using the actual method for all working from home expenses.
You will need to keep a record of all the hours worked from home for the entire year as the ATO won’t accept estimates. Records can be in the form of timesheets, rosters or diary for the full year. You should also keep a document such as invoice, bill, receipt or credit card statement of the running expenses incurred.

Actual Cost Method: If you have a dedicated home office area set aside, you can use the actual method. You will need to keep detailed records of all the expenses being claimed and also a record of how you have worked out the work-related portion of the expense.

8. Rental/Investment Properties
If you own one or more rental/investment properties, it is important to start assembling relevant documents such as statements and invoices/receipts for your 2024 tax return. It is also important to consider strategies to address tax implications arising from the sale of your rental/investment property if you are thinking of selling. Cashflow permitting, it is also a good idea to prepay interest and other expenses to claim a tax deduction in 2024 financial year.
If you haven’t reviewed your rental/investment property loan for some time, now may be a good time to review to get better rates and deals.

Rental Properties continue to remain one of ATO’s key focus areas for this tax time.

Repairs and maintenance is the main area where taxpayers are making mistakes in reporting. Performing general repairs and maintenance on your rental property can be claimed as an immediate deduction. However, expenses which are capital in nature (like initial repairs on a newly purchased property and any improvements during the time you hold the property) are not deductible as repairs or maintenance.

9. Consider Income Protection Insurance
Investing in income protection not only provides peace of mind that your family is taken care of should anything happen to you, but you can also claim it as a tax deduction.

1. Instant Asset Write-Offs $20,000 limit from 1 July 2023
The tax depreciation rules return to normal from 1 July 2023, which includes the instant asset write-off for small businesses (group-wide turnover below $10 million) for depreciating assets costing less than $1,000. However, the government has announced their intention to legislate increasing the threshold to $20,000 for the period 1 July 2023 to 30 June 2025. This measure has not become a law yet.

2. Perform Stocktake – Write off obsolete stock
Review your stock valuation and write-off any stock that is damaged or obsolete. Complete a stocktake and remember that stock can be valued at the lower of cost or net realisable value.

3. Payroll & Single Touch Payroll (STP)
All employers are now required to run their payroll and pay their employees through accounting and payroll software that is Single Touch Payroll (STP) ready.
Employers should ensure their STP year-end finalisation reports are lodged by 14th July.

4. Review Staff Pay Rates
You should also take time to review your staff pay rates and conditions of employment by referring to the Fair Work Commission’s current guidelines and make any changes required from 1 July 2024.

5. Pay June Quarter super by 30 June
In order for small business owners to claim the tax deduction on super contributions made on behalf of employees, the super has to be paid before 30 June. Please note that you may have to process the Super payments by mid-June 2024 to ensure the payment reaches the employee’s funds by 30 June.

6. Super Guarantee (SG) Rate Change
From 1 July 2024, the SG rate is set to increase by 0.5% to 11.5% for all employees.

7. Write-off any bad debts
Review your debtors and write off any unrecoverable debts. These debts will come off your income in the year in which you write them off, regardless of the year you invoiced them.

8. Prepay expenses if cashflow permits.
Prepaying some of your 2024-25 expenses (such as your rent, insurance, or subscriptions to professional associations) in the 2023-24 financial year. Up to 12 months of the following year’s expenses can be deducted in the current tax year.

9. Review Business Insurance Requirements and Limits
It is also a good practice to review your business’s insurances such as Public Liability, Workers Compensation, Business Interruption, Business Insurance, etc. and their coverage and limits to ensure it is in line with statutory or industry guidelines.

10. Bring forward planned maintenance if profit/cashflow allows.
If your business is on track to make a profit this year and you have adequate cash balance, you can bring forward any planned maintenance that you were intending to do in later income years to claim the deduction this year.

11. Defer/Bring forward sale of assets to balance profit/loss.
Depending on how you are tracking to make a profit/loss this year, you can bring forward sales of assets to balance your profit or loss.

12. Manage loans to directors
Any payments, loans or debts forgiven from private companies to shareholders and their associates could be deemed to be an unfranked dividend. Ensure that such loans are either repaid or documented and made subject to minimum interest and repayment terms before the lodgement day of the company / trust’s tax return. Ensure that interest is charged, and minimum repayments are made before 30 June in relation to prior year loans.

13. Taxable Payments Annual Report (TPAR)
Businesses providing building & construction, cleaning, courier, road freight, IT and security need to lodge TPAR statements by 28 August each year to advise the ATO about payment made to contractors for providing services. It is a great time now to ensure you have the details of the contractors such as their ABN, name and address and the gross amount you have paid them for the financial year.

14. Bonuses
Bonuses are only deductible when they are actually incurred i.e. at 30 June the business must be committed to paying them and they are not subject to any discretion.

15. Trust Resolution
Prior to 30 June every year, the trustees of discretionary trusts are required to make and document their resolutions on how the income from the trust is distributed to its beneficiaries. If a valid resolution isn’t executed by this date, any default beneficiaries become entitled to the trust’s income, and are subject to tax. For any income that is derived, but not distributed by the trust, the trust will be assessed at the highest marginal tax rate on this income.

16. Small Business Capital Gains Tax Concessions
CGT concessions can apply to a range of business assets, including business goodwill, property and shares. If applicable, these concessions could result in a tax-free capital gain on a business asset disposal and also the ability to contribute more to super than would otherwise be available to you.

These concessions can be applied where there is a sale of a business asset or a restructure to achieve a more suitable business ownership structure. Where assets are owned by trusts, the distributions by the trust each year may be relevant to the eligibility to claim these concessions.

17. Business Health Checks
The end of the financial year is a good time to review how your business is performing and possible areas for improvement. Good accountants look at both short-term and long-term business and tax planning. Short-term planning looks at what you can do before 30 June to minimise your tax this financial year. Long-term tax planning looks at how you can utilise your business structure to minimise tax, and the type of investments you can make to minimise tax over the long term.

Please feel free to contact your trusted advisor at Vivid Partners should you have any questions about how these measures will affect you.

The team at Vivid Partners

info@vividpartners.com.au

08 6270 2876

Please note that the information provided above is general only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information provided above you should consider the appropriateness of the information having regard to your objectives, financial situation and needs. Before making any decision, it is important for you to consider these matters and to seek appropriate legal, tax, and other professional advice.