End of financial year review and tax planning

Sam Martel Monday, 15 June 2020

The 2020 financial year has been incredible. We have now seen the end of the worst drought on record and as COVID-19 restrictions are lifted, we are noticing an upward swing in business confidence.

Many businesses have experienced a difficult financial year and may not be expecting a tax liability. However, there are still some opportunities that should be considered during this time of the year:

There have been some significant changes to year-end tax planning considerations including;

  • Increase of instant asset write off to $150,000 (this will revert to $1,000 from 1 July 2020)
  • Investment allowance for new assets
  • Review of JobKeeper eligibility
  • Review of changes to financing policies of lenders (payment deferrals and fixed interest break costs)
  • Review of subsidised government loans to farming businesses (RIC loans)
  • Potential to waive lease payments to a related self-managed superannuation fund (may assist preserve cash in a business)
  • Halving of minimum pension withdrawals from a superannuation fund
  • Company tax rate for small business to reduce to 26% from next year (a tax payer may consider bring forward dividends to the 2020 year so they can be franked at 27.5% and not 26%).

Remember that the cost of restocking is not a tax deduction (the deduction is claimed in the year the stock are sold). Specifically – the purchase of stock cannot be deducted against the withdrawal of FMDs. 

We have geared up our work papers and processes to help clients review the 2020 financial year and create strategies to manage their taxable income. Please get in touch if you need our assistance.