2023 EOFY / Tax Planning Checklist

For businesses to maximise their cash position, they should consider the following tax planning opportunities before 30 June:

• Declare dividends and trust distributions by 30 June:
  • Declarations need to be documented in dividend/distribution resolutions
  • It is highly recommended that resolutions are signed by 30 June

• Prepay expenses before the end of the year:
  • If aggregated turnover is < $50m, you can claim 100% deduction in the year an expense is paid

• Bring forward the purchase of plant and equipment:
  • Equipment installed and ready for use by 30 June 2023 will be fully tax-deductible in the current year
  • General Asset Pool will be deducted in full this year
  • Choice can be made for assets not held in General Asset Pool as to whether or not full deduction is allowable
  • Temporary full expensing ends on 30 June 2023
  • Immediate write-off limit for Small Businesses to reduce to $1,000 from 1 July 2023

• Maximise superannuation contributions:
  • Super is only deductible if paid by 30 June
  • Personal contributions can only be claimed if received by super fund by 30 June and notice sent to super fund before the earlier of your tax return’s lodgement date or lodgement due date
  • Annual concessional contribution caps are $27,500
  • Review whether you are eligible to utilise carry-forward of unused concessional contribution caps from prior years to further maximise your contributions

• Write off bad debts:
  • If debtors are not recoverable, and all action has been taken to resolve, then write off the bad debt before 30 June to bring to account the expense
  • Ensure GST is adjusted

• Review eligibility for Loss Carry Back Offset (no longer available after 2023 tax return):
  • Consider if this further encourages immediate write-off of assets
  • Review impact on franking account, and whether adequate franking credits exist to pay dividends (including for remuneration purposes, and Division 7A loan management
  • Consider whether appropriate to change shareholder remuneration from dividend to a deductible director expense

• Maximise your tax-deductible debt:
  • Loans for private purposes are not tax-deductible
  • Review whether refinance options may be available to increase the split of deductible vs non-deductible debt
  • Consider whether Division 7A loans can be restructured

• Write off slow-moving or obsolete stock:
  • Review your stock holding
  • If the market value is lower than the cost of the stock, a deduction can be realised for the difference

• Utilise unrealised capital losses:
  • Ensure you take advantage of capital losses within your group
  • Consider if any losses can be used to reduce current year gains, otherwise these will be carried forward until they can be offset against gain in either the same year or a future year
  • Only the contract date rather than the settlement date needs to be before 30 June for capital gains tax purposes
  • Consider whether distribution minutes can be prepared in a way to utilise group losses

• Review plant and equipment:
  • Review depreciation schedule for any scrapped plant and equipment that can be written off
  • Review the effective lives of equipment and consider whether appropriate to increase rate of depreciation

• Repay Division 7A loans:
  • Cash repayments can reduce the requirement for dividends to be declared

• Consider Section 100A compliance for Trusts:
  • Keep a record of expenditure incurred on behalf of adult children (after they turned 18) – Including university fees and motor vehicle costs; excluding domestic expenses relating to the family home
  • Best practice would be to make these payments from the trust’s bank account

• Review tax rate applying to companies:
  • Base rate companies pay tax at 25% while all others pay tax at 30%
  • Consider impact of timing on dividends and the tax credit vs top-up tax payable
  • Review any planning that could occur to achieve the desired tax rate (may be lower to reduce tax, may be higher to maximise franking credits on dividends)

• Review for access to refundable franking credits:
  • Review for opportunities ahead of 30 June 2023 to access any refundable franking credits
  • Consider whether any loss entities could result in a flow of highly franked income resulting in a refund

• Claim and document your Research & Development activities:
  • When engaged in R&D activities, clearly document the activities and costs relating to those activities to take advantage of R&D Tax Offsets

• Plan for your tax position prior to 30 June:
  • Understand options to reduce or defer tax payments
  • Plan the cash flow for instalments of tax, and the tax due on lodgements of tax returns
  • Identify opportunities to vary tax instalments and improve cash flow
  • Implement above tax planning and other savings.

If you would like to discuss how you can better manage your business’s tax affairs and potentially improve your business’s cash position, please contact our office on (08) 6212 7200 to speak to one of our qualified advisors.