With June 30 being just around the corner, we have put together our annual checklist of items to complete and tax planning opportunities to consider as the 2024 financial year begins.

 

For businesses

Bad debts:

Conduct a thorough review of your outstanding debts and identify any debts that are unlikely to be recovered. Once you have made every reasonable effort to collect the outstanding debt, you may consider writing off the remaining amount as a bad debt. This action will allow you to recover the relevant Goods and Services Tax (GST) in your next Business Activity Statement (BAS).

Fixed Assets:

Ensure that you have reviewed your fixed asset register and written off any depreciable assets identified which are no longer being used. Additionally, as part of the Federal Government budget announced in May 2023, the temporary full expensing measures will end as of 30 June 2023 and the instant asset write off will revert to pre-covid rules. From 1 July 2023, entities that have an aggregated turnover not exceeding $10m, and the value of the eligible assets is less than $20,000 – can have assets immediately written off.

Bonuses:

Employee bonuses are an area where changes to internal processes can change your tax position. By aligning your employee contracts, the timing of personnel reviews and the communication of results, accrued employee bonuses that would otherwise not be deductible until the following year, can be claimed as a deduction in the current year.

 

Key due dates are as follows:

Item                                                                              Due by

Staff Superannuation – 10.5% Gross Wages                  30 June 2023*

Finalisation Declaration for STP Reporting                      14 July 2023

June Quarter Business Activity Statement                       28 July 2023

Payroll Tax 2023 Annual Reconciliation lodgement         28 July 2023

*Note that superannuation contributions for employees needed to be received by the respective superannuation funds prior to 30 June 2023 to obtain a tax deduction in the year ended 30 June 2023. The latest due date for superannuation guarantee contributions for the quarter ending 30 June 2023 will be 28 July 2023, to avoid potential penalties and additional tax consequences.

 

Superannuation:

From 1 July 2023, the Superannuation Guarantee rate will increase from 10.5% to 11%. Be sure that all employee payroll details are updated for the new rate, and pay rates updated if required.

 

For individuals / trusts

 

Motor Vehicle:

Motor vehicle logbooks are only valid for 5 years. If your logbook is 5 years old, or the business usage of your vehicle has changed significantly, please complete a new logbook for a continuous, representative 12-week period.

Trusts:

If you have a trust, to comply with relevant trust legislation, distribution minutes must be completed before the end of the financial year. This will ensure that the income of the trust for the year is distributed in accordance with the trust deed.

This year will also need to consider the implications of the updated ATO views regarding section 100A, which may impact on historical distribution patterns within family groups.

 

Working from home:

With many employees still currently working from home, there is an expectation to see a rise in deductible expenditure relating to these flexible working arrangements provided by employers.

Examples of the expenditure that may be deductible relating to working from home arrangements include:

• Electricity related to heating, cooling and lighting the area you use to work;
• Cleaning costs for a dedicated work area;
• Phone, internet and data expenses;
• Printer paper, ink and other stationery; and
• Home office equipment – including computers, printers, desk and chairs

To claim a tax deduction for these working from home expenses, the following criteria must be met:

• You must have spent the money;
• The expense must be directly related to earning your income; and
• You must have a record to substantiate these expenses.

From 1 July 2022, the ATO removed the simplified method (i.e. short-cut method) for calculating running expenses. There are now only two ways to calculate these working from home expenses:

• Revised fixed rate method – consisting of:
• From 1 July 2022; the fixed rate increased from 52c to 67c per hour which covers electricity, phone usage, internet, stationery and computer consumables;

Separate claims can be made for the depreciation of office equipment, repairs & maintenance and cleaning costs.

• Actual Cost Method – claiming the work-related portion on all actual expenditure incurred whilst working from home.

Records must be kept for all working from home deduction claims. The two methods require both a record of hours, along with evidence of expenditure incurred. Furthermore, the ATO have extended the record-keeping requirements for utilising the revised fixed rate method. These include:

• From 1 July 2022 – 28 February 2023, taxpayers are required to keep a record of the number of hours worked from home (e.g. a 4 week diary)
• Starting from 1 March 2023, taxpayers will need to record the total number of hours they work from home.

You can maintain a record of your hours worked using various forms such as timesheets, rosters, or a diary. It’s crucial to keep these records for the entire income year to support your claims.

The ATO will be closely monitoring the working-from-home deductions claimed this year, requiring taxpayers to provide hours spent accessing employer systems. The ATO will no longer accept estimates from 1 March 2023.

If you have any questions about the changes coming into effect from July 1, 2023 please reach out to your Engagement Partner.