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With the financial year-end approaching, here’s a concise guide on areas under ATO scrutiny and strategies to optimize your deductions.

Opportunities for Individuals

1. Tax Cuts and Deductions:

  • Bring forward deductible expenses to benefit from 1 July 2024 tax cuts.
  • Prepay deductible expenses, make superannuation contributions, and plan charitable gifts for the 2023-24 financial year.

2. Superannuation Contributions:

  • If your total superannuation balance permits, make a one-off deductible contribution up to the $27,500 cap.
  • Utilize unused concessional cap amounts from the last five years if your super balance was below $500,000 on June 30, 2023.
  • Ensure you’re under 75, lodge a notice of intent to claim a deduction, and receive acknowledgment before filing your tax return.
  • For those aged 67-75, meet the work test to make personal contributions.
  • If your spouse earns less than $37,000, contribute to their super for a $540 tax offset given other conditions are met.

3. Offset Tax Bills with Super Contributions:

  • Use larger personal super contributions to offset taxes from capital gains if you sold any shares or property to avoid a large tax bill.

4. Charitable Donations:

  • Donations over $2 to registered DGRs are tax deductible.
  • Consider public or private ancillary funds for structured giving and potential immediate deductions.

5. Investment Property:

  • Get a depreciation schedule to maximize deductions for property wear and tear.

Risks for Individuals

1. Work from Home Expenses:

  • Claim either using the 67c per hour method or the actual expenses method.
  • Keep accurate records and receipts for claims.

2. Investment Property Deductions:

  • Claim expenses only if the property is genuinely available for rent.
  • Properly apportion loan interest and distinguish between repairs (immediate deduction) and capital improvements (deducted over time).
  • Co-owned property expenses must be claimed according to ownership percentage.

3. Gig Economy Income:

  • Declare all income from platforms like Airbnb, Uber, etc., as the ATO matches reported data.
  • New reporting rules for ride-sourcing, taxi travel, and short-term accommodation platforms started from 1 July 2023.

Opportunities for Businesses

1. Bonus Deductions:

  • Instant asset write-off for assets under $20,000, pending legislative approval.
  • Energy incentive of additional 20% deduction for energy-efficient assets, pending legislative approval.
  • 20% bonus skills and training boost deduction for employee training by registered providers.

2. Write-off Bad Debts and Obsolete Equipment:

  • Write off bad debts and obsolete plant/equipment by 30 June.

3. Advance Tax Deductions:

  • Commit to directors’ fees, employee bonuses, and June quarter super contributions in June.

Risks for Businesses

1. Tax Debt and Reporting Obligations:

  • Failing to lodge returns signals issues; ATO can issue assessments.
  • Seek assistance for meeting obligations and managing tax debts.

2. Professional Firm Profits:

  • The ATO is reviewing profit distributions in professional services firms, architects, lawyers, accountants, etc., to ensure appropriate income reporting and tax payments.

Need Help?

For guidance on maximizing your deductions and minimizing risks, reach out to us today 0292213345.

Pitt Martin Group is a CPA accounting firm, providing services including taxation, accounting, business consulting, self-managed superannuation funds, auditing and mortgage & finance. We spend hundreds of hours each year on training and researching new tax laws to ensure our clients can maximize legitimate tax benefit. Our contact information are phone +61292213345 or email info@pittmartingroup.com.au. Pitt Martin Group is located in the convenient transportation hub of Sydney’s central business district. Our honours include the 2018 CPA NSW President’s Award for Excellence, the 2020 Australian Small Business Champion Award Finalist, the 2021 Australia’s well-known media ‘Accountants Daily’ the Accounting Firm of the Year Award Finalist and the 2022 Start-up Firm of the Year Award Finalist, and the 2023 Hong Kong-Australia Business Association Business Award Finalist.

Pitt Martin Group qualifications include over fifteen years of professional experience in accounting industry, membership certification of the Australian Society of Certified Practising Accountants (CPA), Australian Taxation Registered Agents, certified External Examiner of the Law Societies of New South Wales, Victoria, and Western Australia Law Trust Accounts, membership certification of the Finance Brokers Association of Australia Limited (FBAA), Registered Agents of the Australian Securities and Investments Commission (ASIC), certified Advisor of accounting software such as XERO, QUICKBOOKS, MYOB, etc.

This content is for reference only and does not constitute advice on any individual or group’s specific situation. Any individual or group should take action only after consulting with professionals. Due to the timeliness of tax laws, we have endeavoured to provide timely and accurate information at the time of publication, but cannot guarantee that the content stated will remain applicable in the future. Please indicate the source when forwarding this content.

By Zoe Ma @ Pitt Martin Tax