With the end of the 2022 Financial Year fast approaching now is the time to ensure that you have considered potential strategies to minimise your business tax.

Below is a guide to some strategies that you may wish to consider to minimise your tax for the 2022 Financial Year.

In order to be eligible to apply a range of tax concessions you must first qualify as a “Small Business Entity”

What is a “Small Business Entity”?
  • Aggregate turnover of less than $10 million (this includes your businesses annual turnover with the addition of a connected or affiliated business)
  • Operating a business for all or part of the 2022 Financial Year
Company Tax Rates

The 2022 Company Tax Rate for businesses with a turnover of less than $50 million:  25%
(if less than 80% of a company's assessment income is Passive Income, this would include interest, dividends, rent & capital gains)

An investment company can potentially utilise the 25% company tax rate if it qualifies as a “base rate” entity.  As a result, trading trusts that are associated with investment companies should review their distribution of trading income.
Temporary Full Expensing of Assets Acquired

Businesses with an aggregated turnover of less than $50 million can apply the temporary full expensing of assets to eligible second hand as well as new depreciating assets.

Businesses with an aggregated turnover of less than $5 Billion can ONLY apply the immediate deduction of the business portion of a NEW eligible depreciating asset.

TIP:  These assets must be acquired and ready for use prior to the 30th June 2022 in order to be eligible for the deduction in the 2022 Financial Year

Superannuation Contributions

The concessional contributions cap has been increased to $27,500 for the 2022 Financial Year, this cap includes:
  • Employer Super Guarantee Contributions
  • Salary Sacrifice Contributions, &
  • Member Concessional contributions
TIP:  For a contribution to be counted towards a taxpayer's contribution cap & hence deductible in a financial year it must be received by the Fund by the 30th June 2022

Pay Employee Super

In order to be eligible to claim a deduction for employee's superannuation the contribution must be received by the employees Superannuation Fund or the ATO Small Business Superannuation prior to the 30th June 2022. 

Bring Forward Expenses

Consider the purchase of any consumables prior to the 30th June 2022.  This may include marketing, computer supplies, printing & stationery, repairs & maintenance for either business or rental properties or materials.

Small Business Concessions – Prepayments

Eligible Small Business Concessional Taxpayers can claim a deduction for the prepayment of expenses for up to 12 months for such items as rent, subscriptions & interest on loans. 

TIP:  in order to claim a deduction in the 2022 Financial Year these items must be paid prior to the 30th June 2022

Tools of the Trade/FBT exempt items

The purchase of Tools of the Trade or FBT exempt items can provide a tax benefit, this may include the acquisition of lap top computers, personal electronic organisers, mobile phones, protective clothing or briefcases.

TIP:  in order to claim a deduction in the 2022 Financial Year these items must be purchased prior to the 30th June 2022

Deferring Capital Gains

It is important to note that Capital Gains are generally calculated based on contract date & NOT on settlement date.  Therefore, it important to consider your overall tax position when considering the realisation of an asset.

Depreciation – Investment Property

If you or your entity owns an investment property and you have not yet organised a Depreciation Report consider doing so in order to maximise your depreciation & building allowance write off deductions.
Stocktake/Work in Progress

As at the 30th June 2022 undertake a stocktake in order to determine the level of stock on hand.  Review the stocktake in order to write off any obsolete or worthless stock items.

Write off Bad Debts

Review your Trade Debtors listing and write off all bad debts prior to the 30th June 2022.

The advice provided in the above document is general in nature and does not take into account your personal financial circumstances.  Before making any decision based on this document you should take into account your own circumstances and seek advice from your tax advisor @ CSCG

Please call your manager to discuss further on 0399748333
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