Ideas & Stories

2024 Tax Planning Checklist

Just a few smart things can save you a lot of tax. Legitimately!

1. Instant Asset Write Off

Yes, it is still available, and the amount has increased from $20,000 to $30,000, plus it is now available for businesses with turnover up to $50 million. Great!

Can you buy a work vehicle under $30,000? Yes, the range is small, and the luxury items limited, but you can sneak in under this limit.

But this write off is only available until 30 June 2024, so you better get spending. The equipment needs to be installed and ready for use by that date. Of course, in the upcoming budget, the government may well extend that deadline again.

2. Directors Fees

Once the bastion of last-minute tax planning. Now these payments need to be committed prior to year-end and reported with your payroll STP obligation. And of course there will be super obligations due on these amounts.

But here is the kicker. If PAYG obligations are not complied with (you didn’t withhold and remit tax from the payment or journal entry) then the payment is not tax deductible. Seriously!

A bit like ‘late super payments’ that we keep nagging about! The loss of deductions can be costly.

3. Small business Energy Incentive

Up to $100,000 of eligible expenditure is eligible for a 20% bonus depreciation deduction (for turnovers up to $50 million). Need to be installed and ready for use by 30 June 2024 so best hurry. Some of these assets take a while to order and install.

In essence, eligible expenditure is for an asset that: replaces (or is an alternative for) a fossil fuel consuming asset or an energy storing or managing device.

4. Expenses

Bad Debts. Nothing new here. If you have taken steps to seek recovery, then write them off before 30 June and you get the tax deduction in that year. Just remember to document your resolution.

Prepayments. Up to 12 months of Interest, rent, insurance and similar expenditure can be pre-paid and is deductible if turnover is less than $50 million. Handy if you have just had a big year and know the tax bill will be big.

Might also be handy if there is a commercial incentive. For instance, a landlord may offer a small reduction in rent to have it all paid in advance.

Trading Stock. Stock can be valued at the lower of cost, market value and replacement value. You can pick whichever gives the best outcome. You can pick this every year, and item by item if you wish.

Donations. Make them now before year end and be sure to hold on to the tax-deductible receipt.

Superannuation payments. Must be received by the fund prior to year-end. Some payment platforms, banks and funds seem to take forever to process these payments so take care to make these payments by mid-June.

5. Superannuation

Catch up? Did you know that is certain circumstances, it is possible to catch up on missed opportunities to maximise concessional (deductible) contributions from prior years. This is particularly relevant where business owners have been focused on their business cash flow, lifestyle, debts repayments, rather than their future wealth. We see this happening all the time.

Unused contribution caps from 2019 through to 2023 can be added to the 2024 $27,500 contributions cap if the individual’s super balances were less than $500,000 at 30 June 2023. That could see 6 years of deductible contributions made in a single year. You can even look up the extra amount you could contribute in your MyGov account.

Of course, a non-concessional (non-deductible but non-taxable in the fund) contribution of $110,000 can also be made in the 2024 year where the individual’s super balance is less than $1.9 million at 30 June 2023. Up to 3 years can be brought forward.

As we have discussed previously, if you needed to put the maximum funds into super soon, you may be able to make a concessional contribution of $27,500 plus a non-concessional contribution of $110,000 (received) into the fund before 30 June.

Then another similar concessional payment of $30,000 (2025 rate) plus a non-concessional contribution of $360,000 (2025 rate, 3 years together) after 1 July 2024.

All up, $527,500 into super. Nice!

6. 2025 Super changes

Heads Up. From 1 July 2024, the super guarantee (SG) percentage rises to 11.5%. The concessional contributions cap rises from $27,500 to $30,000 and the non-concessional cap rises from $110,000 to $120,000.

Payday Super does not start until 1 July 2026. By then, all business will need to have automated payroll systems to automatically remit super to the relevant employee funds on the same day as employee pays are made.

Of course, there will be significant compliance effort and costs, but the real pain for businesses may be the funding implications. No more quarterly super payments to assist the business with cashflow. But then, no more struggle to find that payment each quarter and lower risk of late payments. Hopefully!