The end of the 2020 financial year is here and for many of us, it may be a year best forgotten.
How do you make sure you and your business start 2021 in the best possible way? Planning!
Tax is often one of the largest costs to business and individuals. Our top tax planning tips are:
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Finish 2020 the right way so you don’t get into trouble. In June:
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Trust resolutions for the year are planned, drafted and signed.
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Company dividends for the year are declared and documented.
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Personal super contributions are received by your superfund by 30 June.
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If your business has received the government’s Cashflow Boost this income is non-assessable non-exempt. Therefore, you will need to consider how this will impact on your business.
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Any JobKeeper payments are assessable income and any tax on these amounts needs to be planed for.
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How are you remunerating Directors this year? Note that unless directors fees are compliant payments (i.e. PAYG is withheld) they are no longer deductible. So if you have previously paid your directors a fee at year end, this strategy may need to be reconsidered. Note that superannuation should also be considered for these payments.
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Start with your best foot forward. In July:
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Make sure your employee super obligations are paid on time.
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If your company’s franking account was in deficit at 30 June, lodge a franking account return by 31 July 2020.
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Plan your optimal tax position :
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In what year should dividends be declared? The base rate entity company tax rate is changing from 27.5% to 26% from 1 July 2020. This may impact upon the optimal timing of dividend payments and have an impact on the franking account balance.
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When should new assets be bought? Note there the increased instant asset write-off of $150,000 for eligible businesses on eligible assets, has been extended until 31 December 2020 but there is also accelerated depreciation until June 2021 that you may be eligible for.
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Have you managed any shareholder loans in the best way? For any client group with a private company and borrowings across the group, Division 7A should always be considered. These laws are complex and any loans or payments that fall under these rules need to be carefully managed.
Your Moore Australia adviser can assist you with tax planning tips or a customised plan specific for your individual or business needs.