Tax Tips with Robert Fry
Should any of the issues affect you, please call our office and speak to your Accountant.
Last updated May 2023
As we approach the end of the Financial Year, and digest the Budget Announcements from Tuesday evening, Rob Fry, one of our directors at AKW, shares his insights on some of the key takeaways.
The Importance of Good Advice
Something that may have gone unnoticed in the recent budget is the war chest ($680 million) provided to the ATO to target individuals and businesses that are illegally or mistakenly underpaying income tax and GST. While this might seem alarming at first, it highlights the importance of having excellent professionals that can help to keep you and your business swimming between the flags, while also having the expertise to get the most out of the numerous tax concessions available. The investment in excellent advice can be just a drop in the ocean compared to potential costs (financial and otherwise) of an ATO audit.
Superannuation Updates
From 1 July 2026, employers will be required to pay superannuation on the same day that salaries and wages are paid, replacing the existing quarterly cycle. This will be a substantial procedural change for employers.
From a compliance perspective, the government is also funding further targeting of the underpayment of superannuation to employees, something that has been on the agenda for some years now.
These issues point toward a focus from the government and the ATO on the payments of employee superannuation. If you have difficulty paying your super or are worried that you may not be compliant, please contact your AKW advisor. We expect strong enforcement in this area, and it is best to address potential issues before they appear on the ATO radar. Furthermore, in such a tight labour market, and with a view to retaining quality personnel, it is important to ensure employee benefits do not go unpaid.
The end of the temporary full expensing
Since 2020, small businesses have been able to claim a tax deduction for the full cost when buying new and used assets. Whether this is a new coffee machine for $10,000 or a new header for $500,000, the whole amount can be written off immediately. As expected, and confirmed in the recent budget, this measure is ceasing on 30 June 2023. From 1 July 2023, assets costing less than $20,000 can still be written off in full (no need to rush to get the coffee machine before 30 June) and all other assets will have to be gradually written-off over several years.
This change makes tax planning for the 2023 year particularly important. If you are considering purchasing any assets over $20,000, then you must have received them before 30 June 2023 to be entitled to claim the whole amount in the 2023 financial year. While this certainly is an incentive, it is important that these decisions are made in consultation with your accountant as some businesses may in fact benefit from the gradual claim over a number of years.
Getting these decisions right can be critical to the cash flow of businesses, and it is something that we deal with day in and day out.
If you haven’t already started tax planning, now is the time to reach out to your AKW advisor to work through making the smartest decision for your business.
Boosting Cash Flow for Companies
Going hand in hand with the end of temporary full expensing is the end of the loss carry back rules. Simply put, this has allowed companies that have returned a taxable loss between 2021 and 2023, to use this loss to claim back tax paid in previous years.
This has proved to be a great planning point for shrewd advisors, who consider it in conjunction with the temporary full expensing rules. Businesses have been able to purchase large assets, write them off, potentially pushing the bottom line into a loss position. Not only does this allow companies to reduce the current year tax burden, but they have been able to claim back tax paid in previous years.
2023 is the final year that companies can access these provisions, and the application can be complex, however the upside to cash flow can be a game changer for small businesses. Speak to your advisor before the end of the year to ensure that you are getting the most out of this concession.
Access the AKW Federal Budget 2023-2024 insight with additional announcements and thoughts here.
Robert Fry is a member of Chartered Accountants Australia and New Zealand. Liability limited by a scheme approved under Professional Standards Legislation. This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial and tax/or legal advice prior to acting on this information. Past returns are not indicative of future returns.
