Year End Considerations

Businesses

In order to look at minimising tax payable this year, consider the following:

Write off any bad debts — the debt must be bad, not merely doubtful, and the taxpayer must have determined that the debt is unlikely to be recovered through any reasonable and commercial attempts.

Write off slow-moving or obsolete stock and determine the basis on which trading stock will be valued at the end of the income year.

Prepayment of expenses - determine whether an immediate deduction for a prepayment is available to businesses with an aggregated turnover of less than $50 million as well as individual non-business taxpayers.

Consider paying all the employees SGC obligations prior to 30 June 2021 to get a deduction this financial year

Individuals

Carefully determine whether deductions are allowable for work-related expense, particularly for those working from home during 2020–21, and ensure these can be substantiated.

If you have been working from home, the Australian Taxation Office (ATO) has introduced a temporary shortcut method which can be used for the 2020-21 financial year. This allows you to claim 80c for each hour you worked from home during the year.i

The shortcut method covers the additional running costs for home expenses such as electricity, phone, internet, cleaning and the decline in value of home office furniture and equipment. You don't even need a separate office space in your home. To make a claim, you just need a record of the hours you worked from home, which could be a roster, time sheet or diary.

Some people may get a better result claiming the work-related portion of their actual working from home expenses using the actual cost method. While you don't need a separate home office, if you work from the kitchen table or the couch the amount you can claim this way may be limited.

Alternatively, if you do have a dedicated home office, you can claim using the fixed rate method. The fixed rate is 52c an hour for every hour you work at home and covers things like gas and electricity, and the decline in value or repair of office furniture and furnishings. On top of this, you may also be able to claim the work-related portion of phone and internet expenses, computer and stationery supplies, and the decline in value of your digital devices.ii

If you intend to top up your superannuation contrition this financial year, ensure the funds are banked into the Superannuation Fund prior to 30 June 2020.

Be mindful of the caps currently in place:

  • Deductible contributions $25,000
  • Non Concessional contributions $100,000

Rental Properties

Travel costs related to residential rental properties are non-deductible, and the costs of holding vacant land are non-deductible.

Ensure that initial repairs or expenditure that is capital in nature in relation to residential rental properties is not claimed as a repair.

Ensure that you have invoices for all expenses claimed for the property

Superannuation

If you are in pension phase, ensure that you have withdrawn the minimum pension amount prior to 30th June 2021.