End of Financial Year 2022 - checklist

Temporary full expensing available until 30 June 2023

In the 2021 federal budget, the government had announced that the temporary full expensing rules and this is a current law till 30 June 2023 from the original start date of 06th October 2020. This applies to business with aggregate turnover of less than $5 billion.

There is no cost limit relating to the size of the deduction for an eligible asset. That is, an asset of any value may qualify for a full deduction, except for motor vehicles above the cost limit of $60,733 that increases to $64,741 from 01st July 2022.

So, there is an opportunity now to get tax deduction for your depreciable assets before 30th June 2022

Other End of Financial year strategies to consider:

Spouse super contribution offset

If you made personal superannuation contributions on behalf of a spouse, there is a tax offset of up to $540 per year in your tax return. This is available for spouse contributions of up to $3,000 per year, where your spouse earns less than $37,000 per year, and a partial tax off set for spousal income up to $40,000 per year.

Personal deductible contributions

If you are eligible to contribute to super, you may make voluntary personal contributions and claim a tax deduction up to your concessional contribution cap. The threshold for 2021/22 financial year is $27,500. This gives you greater flexibility to top up your concessional contributions made by your employer, especially if your employer does not offer salary sacrifice. Also, please remember there is a brought forward rules to top up the contributions from previous three years where you were not able to maximise your concessional contributions as long as your superannuation balances as at 01st July 2021 was under $500,000.

Capital gains and losses

A capital gain arising from the sale of an investment property or shares and capital losses can be used to offset the capital gains. For example, you may have sold investments that were no longer appropriate for your circumstances and any capital losses realised as a result can be offset against any capital gains you have realised throughout the year. Unused losses can be carried forward to offset capital gains in future years. Please seek independent financial advice before making changes to your investments.

Prepaying interest

If you have an investment loan you can arrange to prepay the interest on that loan for up to 12 months and claim a tax deduction in the same year the interest was prepaid.

Super co-contributions

If you receive at least 10% of your income from employment or self-employment and you earn less than $41,112, you may be eligible for the maximum super co-contribution of $500 from the Government for an after-tax contribution to super of $1,000. The co-contribution phases out once you earn $56,112 or more. The ATO uses information on your income tax return and contribution information from your super fund to determine your eligibility.

Some of the tax related changes taking place effective 01st July 2022 are as follows:

Employer SGC Rate up to 10.50%

Employer’s superannuation guarantee charge rate (SGC) to make contributions to their employees is going up from current rate of 10% of the Ordinary Earnings to 10.50%.

Removing $450 per month threshold for SGC

From 1 July 2022, employers will be required to make super guarantee contributions to their eligible employee's super fund regardless of how much the employee is paid. Employees must still satisfy other super guarantee eligibility requirements. Employers must check their systems to ensure, SGC calculations are correct.

Minimum Pension Withdrawn

Minimum drawn downs for superannuation pensions have again been halved for 2022-23 income year. This has been in place since 2019-20 due to Covid 19. Please speak with your financial advisor.

For further assistance with the above announcements and opportunities, please contact your RCB Advisors team member as soon as possible.

Source: CCH and ATO