Year End Tax Planning

Here are some tips for the 2019 financial year end checklist on the tax planning front. We have included some key ones here for your generic information.

For any further clarification and other opportunities, please feel free to contact RCB Advisors.

Individuals

Personal superannuation contributions

Individuals are able to make a personal deductible superannuation contribution regardless of whether they are self-employed or not. In most cases, individuals should be able to review their payroll reports to determine the difference between the concessional limits and the employer contributions.

Individuals should be reminded that the concessional contributions cap is $25,000 for the 2018/19 income year.

Additionally, individuals earning over $250,000 in taxable income need to be aware that 15% Div 293 tax will apply to concessional superannuation contributions. The Div 293 tax may be paid from an individual’s own money or from their superannuation fund using a release authority.

Spouse contribution

A $540 tax offset is available for after-tax contributions (up to $3,000) to a complying superannuation fund on behalf of a spouse (married or de facto) where the spouse’s annual taxable income is less than $37,000. A reduction of the maximum offset is available where spouse’s income is between $37,000 and $40,000.

Superannuation government co-contribution

For low income earners, subject to certain conditions, the government makes a co-contribution of up to $500 if a taxpayer makes after-tax contributions of at least $1,000. The co-contribution begins to phase-out at a taxable income of $37,697, and is not available for taxable income above $52,697.

Prepayments

Subject to cash flow considerations, consider making deductible purchases by year’s end in order to accelerate deductions. This applies particularly if the income in the following year is expected to be lower than in the current year.

In certain circumstances, an immediate deduction can be available for prepaid expenditure (eg interest on a loan relating to a rental property).

Business

Instant asset write-off increased, extended and allowed for medium-sized businesses

The $20,000 instant asset write-off for small business has been increased to $30,000 from 2 April 2019. The scheduled end date of the write-off has been extended from 30 June 2019 to 30 June 2020.

Also, there is another limit of $25,000 which is available from 29 January 2019 to 2 April 2019.

For medium-sized business, which is defined as being over $10m in aggregated turnover but under $50m, an entitlement to a $30,000 instant write-off is allowed until 30 June 2020. The assets must be purchased after 2 April 2019.

Fodder storage assets allowed immediate write-off

For primary producers, a new law has been enacted which allows fodder storage assets to be immediately written off.

Fodder storage assets may include silos and hay sheds, and are used to store grain and other animal feed. The immediate write-off will apply if the asset is purchased and first installed ready for use on or after 19 August 2018.