CP Partners Logo
Header Background

Latest News

2024 Year End Tax Planning Guide (Part 2)

2024 Year End Tax Planning Guide (Part 2)

Over May and June we will add two articles to our website to help you plan and take actions before the end of the 2023-24 financial year.

.

This is Part 2 and focuses on key strategies to manage your tax bill.  Both Part 1 and 2 will cover the following and all are worth spending some time to review and think about how your business can organise your affairs in these areas.

Areas of tax planning to be considered:

  • Key Tax Minimisation Strategies. (added to website last month)
  • Round Up of Other Year End Tax Issues.
  • Other Tax Effective Strategies for Businesses to Consider.
  • Superannuation Tax Planning Opportunities.
  • Immediate Write Off & Temporary Full Expensing for Individual Small Business Assets.

 

Immediate Write-Off For Individual Small Business Assets & Temporary Full Expensing

This bit could be wrong.  Bill is before Parliament that will temporarilty increase limit to $20,000 but Opposition amended to $30,000 but either yet to pass into law and this has to be spent before 30-6-2024.  ‘As it stands, businesses with a turnover of less than $10 million can claim the instant asset write-off for assets valued less than $1,000 and that are first used or installed between July 1, 2023 and June 30, 2024.’

From July 1, 2023, the instant asset write-off threshold is now a maximum of $20,000. revert to $1,000 from July 1, 2023.. Conditions for accessing the $20,000 instant asset write-off threshold for small business entities in the 2024 income year include:

  • It only relates to Plant, Equipment and Vehicles. It does NOT relate to Capital improvements to buildings.  
  • The items can be new or second hand. You can have paid cash or they can be financed. 
  • The entity must operate a business during the 2024 income year.
  • Its aggregated annual turnover must be under $10 million, based on either the current or previous year's figures.
  • Choosing to apply the simplified depreciation rules for the 2024 income year is necessary.
  • The asset's cost must be less than $20,000.
  • The asset must be first used, or installed and ready for use, for a taxable purpose between July 1, 2023, and June 30, 2024.

It's crucial to understand that if a small business entity opts out of applying the simplified depreciation rules for the 2024 income year, they won't have access to the instant asset write-off rules, regardless of meeting other basic conditions.
The instant asset write-off threshold applies per asset, allowing small business entities to potentially deduct the full cost of multiple assets throughout the 2024 year, provided each asset's cost is less than $20,000. Additionally, the $20,000 threshold applies to determining whether the full pool balance is written off in the 2024 income year.

Eligible assets for the instant asset write-off rules are those falling within the depreciation provisions. Capital improvements to buildings under the capital works rules are excluded. Assets costing $20,000 or more, which cannot be immediately deducted, can still be included in the small business general pool and depreciated at 15% in the first income year and 30% in subsequent income years.

 

Checklist of Other Year End Tax Issues

In addition to the tax planning opportunities, there are a number of obligations in relation to the end of the financial year which should be considered:

If you use a Motor Vehicle in producing your income you may need to:

  • Record Motor Vehicle Odometer readings at 30 June 2024
  • Prepare a log book for 12 continuous weeks if your existing one is more than 5 years old. Please note, if you commence the logbook prior to June 30, 2024, the usage determined will still be appropriate for the whole of 2024/25. As such, it is not too late to start preparing one for the current financial year. (Tip – the ATO has an App that can assist with keeping records such as business use logbooks - https://www.ato.gov.au/General/Online-services/ATO-app/myDeductions/?=Redirected_URL

If you have started an account-based pension:

Ensure that you have withdrawn the annual minimum required.

If you are in business or earn your income through a Company or Trust:

  • Employer Compulsory Superannuation Obligations:

The deadline for employers to pay Superannuation Guarantee Contributions for the 2023/24 financial year is the 28 July 2024.  However, if you want to claim a tax deduction in the 2023/24 tax year the super fund (or Small Business Superannuation Clearing House) must receive the contributions by 30 June 2024. You should therefore avoid making contributions at the last minute because processing delays could deny you a significant tax deduction in this financial year.

  • For Private Company - Div 7A Loans - Business owners who have borrowed funds from their company in prior years must ensure that the appropriate principal and interest loan repayments are made by 30 June 2024. Current year loans must be either paid back in full or have a loan agreement entered into before the due date of lodgement of the company return. Failure to comply risks having it counted as an unfranked dividend in the individual’s tax return
  • Trustee Resolutions - ensure that the Trustee Resolutions on how the income from the trust is distributed to the beneficiaries are prepared and signed before June 30, 2024 for all Discretionary (“Family”) Trusts. If a valid resolution hasn’t been executed by this date, the default beneficiaries become entitled to the trust’s income and are then subject to tax. Income derived but not distributed by the trust will mean the trust will be assessed at the highest marginal rate on this income.
  • Preparation of Stock Count Working Papers at June 30, 2024.
  • Preparation and reconciliation of Employee PAYG Payment Summaries (formerly known as Group Certificates). Note you are not required to supply your employees with payment summaries for amounts you have reported and finalised through Single Touch Payroll.

 

From 1 July 2024:

The compulsory Super Guarantee Contribution rate increases from 11 % to 11.5% from July 1, 2024.

Company Tax Rates For Small Businesses

The company tax rate for base rate entities with less than $50 million turnover was 25% for the 2024 financial year where it as:

  • An aggregated turnover less than the aggregated turnover threshold ($50 million)
     
  • 80% or less of their assessable income is base rate entity passive income – this replaces the requirement to be carrying on a business.

 

Other Tax Effective Strategies For Businesses

BUSINESSES SHOULD ALSO CONSIDER THE FOLLOWING ITEMS

  • Stock Valuation Options - Review your Stock on Hand and Work in Progress listings before June 30 to ensure that it is valued at the lower of Cost or Net Realisable Value. Any stock that is carried at a value higher than you could realise on sale (after all costs associated with the sale) should be written down to that Net Realisable Value in your stock records.
     
  • Write-Off Bad Debts – if you operate on an accruals basis of accounting (as distinct from a cash basis) you should write off bad debts from your debtors listing before June 30. A bad debt is an amount that is owed to you that you consider is uncollectable or not economically feasible to pursue collection. Unless these debts are physically recorded as a ‘bad debt’ in your system before 30th June 2024, a deduction will not be allowable in the current financial year.
     
  • Repairs and Maintenance Costs – Where possible, and cash flow allows, consider bringing these repairs forward to before June 30. If you don’t understand the distinction between a repair and a capital improvement please consult with us because some capital improvements may not be tax deductible in the current year and could be claimable over a number of years as depreciation.
     
  • Obsolete Plant and Equipment - should be scrapped or decommissioned prior to June 30, 2024 to enable the book value to be claimed as a tax deduction.

 

Superannuation Tax Planning Opportunities

CONCESSIONAL CONTRIBUTION CAP OF $27,500 FOR EVERYONE

The tax-deductible superannuation contribution limit or cap is $27,500 for all individuals regardless of their age for the 2023/24 financial year.  This will be increased to $30,000 from the 1st July 2024.

If eligible and appropriate, consider making the most of your 2023/24 financial year annual concessional contributions cap with a concessional contribution. Note that other contributions such as employer Superannuation Guarantee Contributions (SGC) and salary sacrifice contributions will have already used up part of your concessional contributions cap.

 

CARRY FORWARD CONCESSIONAL CONTRIBUTIONS

If your total superannuation balance as at June 30, 2023 was less than $500,000 you may be in a position to carry-forward unused concessional caps for up to 5 years.

Members can access their unused concessional contributions caps on a rolling basis for five years and amounts carried forward that have not been used after five years will expire.

The advantage of making the maximum tax-deductible superannuation contribution before June 30, 2024 is that superannuation contributions are taxed at between 15% and 30%, compared to personal tax rates of between 32.5% and 45% (plus 2% Medicare levy) for an individual taxpayer earning over $45,000.

Typically, self-employed individuals and those who earn their income primarily from passive sources like investments make their super contributions close to the end of the financial year to claim a tax deduction. However, individuals who are employees may also use this strategy and those who might want to take advantage of this opportunity.

 

 NON -CONCESSIONAL SUPER CONTRIBUTIONS

If eligible and appropriate, consider utilising all or part of your 2023/24 financial year annual non-concessional contributions cap by making a non-concessional contribution for up to $110,000 for the 2024 financial year.   This will be increased to $120,000 from 1 July 2024.

If you are not currently in a non-concessional contributions bring forward period, consider whether you may be in a position to ‘bring-forward’ your non-concessional contributions caps for the 2024/25 and 2025/26 financial years.



GOVERNMENT CO-CONTRIBUTION TO YOUR SUPERANNUATION

The Government co-contribution is designed to boost the superannuation savings of low and middle-income earners who earn at least 10% of their income from employment or running a business. If your income is within the thresholds listed in the table below and you make a ‘non-concessional contribution’ to your superannuation, you may be eligible for a Government co-contribution of up to $500.

To be eligible you must be under 71 years of age as at June 30, 2024. In 2023/24, the maximum co-contribution is available if you contribute $1,000 and earn $43,445 or less.  A lower amount may be received if you contribute less than $1,000 and/or earn between $42,016 and $57,016. 

The matching rate is 50% of your contribution and additional eligibility include: having a total superannuation balance of less than $1.9 million on 30 June of the year before the year the contributions are being made having not exceeded your non-concessional contributions cap in the relevant financial year.

 

 TRANSITION TO RETIREMENT

If you don’t want to fully retire and would like to reduce your working hours you can take advantage of what is known as “Transition to Retirement" TTR. This means that providing you have reached your preservation age you can elect to keep working full time or part- time and take money out of your super to supplement your income. This is popular for those who want to scale down their working hours rather than retiring.

Date of Birth                                          Preservation Age

Before 1 July 1960                                              55
1 July1960 - 30 June 1961                             56
1 July 1961 - 30 June 1962                            57
1 July 1962 - 30 June 1963                            58
1 July 1963 - 30 June 1964                            59
1 July 1964 - 30 June 1965                            60

When you are receiving a TRT pension you can still work and claim a tax deduction for concessional  contributions into super currently $27,500 for the 2024 financial year, and then increasing  to $30,000 from the 1st July 2024..

If you decide to implement a TTR strategy, you must withdraw a minimum amount currently 4% for someone aged 60 (based on age) from your superannuation account balance up to a maximum of 10%. .

If you are under 60 any amount you withdraw will be subject to tax at your marginal rate of tax. You will also be entitled to receive a tax rebate of 15%. After the age of 60, the good news is that any amount you withdraw is TAX FREE!

Case Study 1 : Bill reduces his work hours

Bill just turned 60 and earns $50,000 a year before tax. He decides to ease into retirement by reducing his work to three days a week. This means his income will decrease to $30,000.  Bill transfers $155,000, of his super to a transition to retirement pension and withdraws $9,000 each year, tax-free. This replaces some of his lost pay.

Case Study 2: Sue reduces her tax

Sue is 60 and earns $100,000 a year. She intends to keep working full-time for at least another five years. Sue transfers $200,000 from her super to an account-based pension so she can start a TTR strategy,

She salary sacrifices into his super. This will reduce her income tax, but also hers take-home pay. She tops up her income by withdrawing up to 10% of her TTR pension balance each year.

As you can see the TRT strategy is very useful for people wanting to work less and supplement their income by drawing from superannuation.  

 

ACCOUNTS BASED PENSIONS  

If you are aged 60 + and retired or 65+ and still working, There are significant tax advantages in taking an Accountants Based Pension from your super. Not only are the withdrawals you make tax-free, but also the earnings within your superannuation fund are tax-free to 1.9 million dollars

 Although you must withdraw, the minimum amount must be paid each year for pensions as per the table below, there  are  no limits on the amount you can withdraw.

The minimum amount for ages: 

Under 65 is 4%
 65 to 74 is 5%
 75 to 79 is 6%
 80 to 84 is 7%

To put in place an accounts-based pension, you will need to speak to your superannuation fund provider.

 

SELF-MANAGED SUPERANNUATION

A Self-Managed Superannuation Fund (SMSF) can provide significant tax savings, but they don’t suit everyone. There are significant regulations surrounding the management and administration of SMSF’s. With the end of the financial year approaching, now is a good time to discuss the pros and cons of establishing your own SMSF. It might be appropriate to establish a SMSF in conjunction with other tax planning opportunities.

Hot Issues

Mario Chiodo

Mario Chiodo (CPA)

Having a wealth of knowledge and experience in public practice, before founding his own firm in 1985, Mario is a seasoned Partner and leader of the CP Partners team. Mario’s role over the years has been pivotal in guiding clients through complex financial landscapes and ensuring their success. He is committed to delivering high-quality service, fostering strong, long-term client relationships, and provides the CP team with strategic guidance and support. Mario is the office coffee machine’s biggest fan (it’s never too late for an espresso)! Outside of work, Mario enjoys gardening, spending quality time with his family and dog Marlie, and when the season is right, you’ll find him mastering homemade wine and smallgoods!

John Capuana

John Capuana (CPA)

John joined CP Partners back in 1997. In his role as Partner, he provides fundamental advice to clients, ensuring effective communication with both clients and the CP team. John values the long-term relationships he’s built with clients and the positive impact made by working together. His extensive experience in public practice has shaped his approach, allowing him to leverage lessons learnt throughout his career. John is a master of the lunchtime AFL quiz, and on weekends, he enjoys spending time with his family and granddaughter, hitting the golf course, and supporting his beloved Cats at AFL games in Geelong.

Alf Magnano

Alf Magnano (CPA)

In his role as Partner, Alf dedicates his efforts to guiding clients to achieve their business and financial goals in a way that is most beneficial for them. He particularly enjoys being available to provide support to clients as and when needed, always going the extra mile to help! Beginning in 2000, his journey with CP Partners has allowed him to refine his skills. He often mentors the CP team is various areas, helping to shape the next generation of accountants. Out of the office, Alf indulges in his passion for trekking through jungles in search of elusive plants, combining adventure with his love for nature. We have Alf to thank for the beautiful greenery spread throughout the CP office!

Gagan Bijan

Gagan Bijan (CA)

As the Finance Manager at CP Partners, Gagan’s day-to-day responsibilities ensure that internal finances are meticulously managed and under control. He thrives in his role as it allows him to leverage his expertise in financial management whilst continuing to widen his knowledge. Gagan has been instrumental in implementing key initiatives at CP Partners such as budgeting tools, software updates, and policy development. He remains our in-house IT expert! In his free time, Gagan enjoys watching soccer and barracking for India in the cricket.

Ruba Marcus

Ruba Marcus (CA)

Ruba is CP Partners’ inaugural Manager of Client Operations, which sees her managing the team budget and coordinating workflow each day. She is also a Senior Business and Tax Adviser and a member of Chartered Accountants Australia and New Zealand (CAANZ). Ruba is passionate about supporting our clients to achieve their business and financial goals as well as helping all CP team members develop and grow to fulfil their potential. Ruba has a wealth of knowledge, and enjoys taking on new challenges, having worked on businesses of all sizes and SMSFs for over 18 years! Outside of work Ruba loves spending quality time with her family.

Adam Gulliver

Adam Gulliver (CPA)

Adam is a senior accountant at CP Partners, dedicated to achieving the best outcomes for clients by providing valuable advice. He enjoys working with a diverse range of clients - striving to build strong relationships with each of them. He also takes pride in sharing knowledge to help the rest of the CP team learn and grow. Adam’s role has recently developed into the (self-appointed) president of the CP Partners ‘Social Club’, where he helps to organise team lunches and events! On the weekends, you’ll find Adam on the sidelines as an Interchange Official at AFL games. He has been a dedicated North Melbourne member for over 40 years! Adam appreciates a nice glass of wine and enjoys travelling, with plans to explore more of the world soon!

Geena Chiodo

Geena Chiodo (CPA)

Geena joined the CP Partners team in 2019, bringing 4 years of experience from various accounting roles within the construction industry. She is a member of CPA Australia, an Excel whiz, and has evolved into CP Partner’s go-to expert for all things Xero. Geena has a strong attention to detail and a passion for problem solving and teaching new skills to other team members. She finds great satisfaction in building strong client relationships and being their trusted point of contact. Out of the office, Geena enjoys travelling with her partner to sunny destinations, getting lost in a good book, supporting Collingwood at AFL games, and spending time with family, friends and her dog Marlie.

Sudath Dissanayaka

Sudath Dissanayaka (CA Provisional)

As an accountant at CP Partners, Sudath enjoys collaborating with the team and working on a diverse range of clients. He has a passion for continuous learning and relishes the dynamic nature of tax that ensures each day is unique! In the office, you’ll find Sudath mastering new software with ease and always excited to take on a new challenge. Outside of work, Sudath is a keen car and Lego enthusiast. He enjoys spending time with his family, his two Golden Retrivers, and baby daughter.

Navdeep Singh

Navdeep Singh (CA)

With over 17 years of experience in accounting, auditing, and taxation, Navdeep brings a wealth of knowledge to his role as Team Leader of CP Partners’ Indian team. His day-to-day responsibilities include managing workflow for his team and working on accounting and compliance for various sized clients. Navdeep has fantastic analytical skills and is an instrumental part of the CP team. Outside of work, Navdeep enjoys listening to good music, and on the weekends, you’ll find him playing local cricket.

Sahil Arora

Sahil Arora (CA)

Sahil’s journey with CP Partners began in 2022 when he joined as an accountant within the Indian Team. His day-to-day responsibilities involve working on accounting and compliance for individuals and businesses of all sizes. Sahil is a hardworking and reliable team member, who enjoys taking opportunities to deepen his technical knowledge. He has a calm and composed demeanour, which enables him to handle challenges and pressure situations with ease. Outside of work, Sahil enjoys practising yoga, watching cricket, and playing when he can too!

Elizabeth Magnano

Elizabeth Magnano

Liz joined CP Partners in 2016 and brings with her over 25 years of experience in delivering administration services for various accounting and financial planning firms. Liz remains focused on enhancing client services and providing timely advice and support to clients. She finds it most satisfying helping clients to achieve their financial objectives. Liz is an instrumental leader of the client services team, always going the extra mile to provide client support. Outside of work, Liz is a passionate Carlton supporter in the AFL and enjoys following the Australian cricket team.

Anna Atar

Anna Atar

Anna has been a valued member of the CP Partners team since 2001, bringing over 25 years of experience to her role. Throughout her tenure, she has embraced the evolving landscape of the accounting industry, dedicated to helping clients navigate changes. You’ll see Anna at the front reception desk, cheerfully greeting clients as they arrive. She takes great pleasure in interacting with clients and is an integral part of their journey as they achieve their financial and life goals with CP’s guidance. Outside of work, Anna enjoys gardening and cherishes spending time with her family, particularly since the arrival of her grandson.

Suzie Vasileski

Suzie Vasileski

Suzie joined CP Partners in 2022 as administration support, marking her first role at an accounting firm. Since then, she has become an integral part of the client services team, always happy to assist clients with their queries both on the phone and in person. Suzie's involvement in various aspects of accounting work means she discovers something new every day! Her enthusiasm, dedication, and clear communication style makes her a cherished member of the team. On the weekends, Suzie enjoys spending time with family, travelling around Australia and overseas, and eating out at beautiful restaurants!

General Disclaimer

The material on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on the website is General Advice and does not take into account any person’s individual investment objectives, financial situation or needs.

Before making an investment decision based on this advice you should consider whether it is appropriate to your particular circumstances, alternatively seek professional advice.

Privacy Policy

CP Partners is committed to providing quality services to you and this policy outlines our ongoing obligations to you in respect of how we manage your Personal Information.

We have adopted the Australian Privacy Principles (APPs) contained in the Privacy Act 1988 (Cth) (the Privacy Act). The NPPs govern the way in which we collect, use, disclose, store, secure and dispose of your Personal Information.

A copy of the Australian Privacy Principles may be obtained from the website of The Office of the Australian Information Commissioner at https://www.oaic.gov.au/.

What is Personal Information and why do we collect it?

Personal Information is information or an opinion that identifies an individual. Examples of Personal Information we collect includes names, addresses, email addresses, phone and facsimile numbers.

This Personal Information is obtained in many ways including correspondence, by telephone and facsimile, by email, via our website www.cppartners.com.au, from your website, from media and publications, from other publicly available sources, from cookies and from third parties. We don't guarantee website links or policy of authorised third parties.

We collect your Personal Information for the primary purpose of providing our services to you, providing information to our clients and marketing. We may also use your Personal Information for secondary purposes closely related to the primary purpose, in circumstances where you would reasonably expect such use or disclosure. You may unsubscribe from our mailing/marketing lists at any time by contacting us in writing.

When we collect Personal Information we will, where appropriate and where possible, explain to you why we are collecting the information and how we plan to use it.

Sensitive Information

Sensitive information is defined in the Privacy Act to include information or opinion about such things as an individual's racial or ethnic origin, political opinions, membership of a political association, religious or philosophical beliefs, membership of a trade union or other professional body, criminal record or health information.

Sensitive information will be used by us only:

Third Parties

Where reasonable and practicable to do so, we will collect your Personal Information only from you. However, in some circumstances we may be provided with information by third parties. In such a case we will take reasonable steps to ensure that you are made aware of the information provided to us by the third party.

Disclosure of Personal Information

Your Personal Information may be disclosed in a number of circumstances including the following:

Security of Personal Information

Your Personal Information is stored in a manner that reasonably protects it from misuse and loss and from unauthorized access, modification or disclosure.

When your Personal Information is no longer needed for the purpose for which it was obtained, we will take reasonable steps to destroy or permanently de-identify your Personal Information. However, most of the Personal Information is or will be stored in client files which will be kept by us for a minimum of 7 years.

Access to your Personal Information

You may access the Personal Information we hold about you and to update and/or correct it, subject to certain exceptions. If you wish to access your Personal Information, please contact us in writing.

CP Partners will not charge any fee for your access request, but may charge an administrative fee for providing a copy of your Personal Information.

In order to protect your Personal Information we may require identification from you before releasing the requested information.

Maintaining the Quality of your Personal Information

It is an important to us that your Personal Information is up to date. We will take reasonable steps to make sure that your Personal Information is accurate, complete and up-to-date. If you find that the information we have is not up to date or is inaccurate, please advise us as soon as practicable so we can update our records and ensure we can continue to provide quality services to you.

Policy Updates

This Policy may change from time to time and is available on our website.

Privacy Policy Complaints and Enquiries

If you have any queries or complaints about our Privacy Policy please contact us at:

(03) 9408 6555