BUSINESS ADVICE • 30 MAY 2023 • 4 MIN READ

7 quick tips for the end of the financial year

a jar of coins with a sticky notes says 7 EOFY tips

SECTIONS

1. Increasing Super contributions

2. Prepaying expenses

3. Investing in training and technology

4. Director payments

5. Instant asset write-off and temporary full expensing

6. Loss carry back tax offset

7. Consider your structure

In Australia, the end of the financial year falls on the 30th of June. While it can be a busy time for both business owners and accountants, it also presents a great opportunity to organise, reflect, and prepare for the year ahead.

Here are 7 tips to help you prepare for (and make the most of) the end of the financial year.

1. Increasing Super contributions

Super contributions are a great way for business owners to save for retirement - and they’re a tax deduction to your business. You simply need to make these contributions through a salary sacrifice arrangement or as an individual concessional contribution.

For the 2023 financial year, you can make additional contributions to your super fund of up to $27,500. In some cases, you may be able to contribute more than this, as the ATO currently allows unused concessional contributions to be rolled forward from the 2019 financial year.

Things to consider:

Payments must be received by the fund prior to the 30th of June to be deductible.
Sole traders and individuals must provide a notice of intent to claim to their superannuation provider before either the due date of the individual return or the actual lodgement date of the return (whichever comes first!).
Be careful about how much you contribute, as over-contributing can have significant tax implications - your contributions cap includes your compulsory superannuation payments.

2. Prepaying expenses

To reduce your current taxable income, you can prepay expenses you expect to have in the next financial year by bringing them into the current financial year.

Commonly prepaid expenses include business travel, insurance, software, subscriptions, rent, conferences, and accounting fees.

Things to consider:

You can only prepay expenses for up to 12 months.

3. Investing in training and technology

In the 2022-2023 budget, the ATO included a proposal known as the Training and Technology investment boost. This allows a 120% deduction for training and technology expenses incurred by small and medium businesses (who have an annual turnover of less than $50M). This will include expenditure from the 29th of March 2022 through to the 30th of June 2024.

Technology boost: These expenses must be for digital operations or digitising current operations. Examples include computers, portable payment devices, cyber security systems, subscriptions to cloud-based services, and digital media/marketing.
Training boost: These are the expenses for the professional development and growth of team members. Only the amount charged by the training organisation is deductible.

Things to consider:

The 2023 financial year will be the first year to claim this, and you will be able to claim an additional 20% on expenses that were incurred in the 2022 financial year. Be sure to review your training and technology expenses from 2022!

4. Director payments

It’s important to consider both how, and how much, you pay yourself. As a business owner of a company, there are 3 ways to take money out of the company: by paying a salary, paying a dividend, or taking a loan.

Look at what options are best for you to ensure you are compliant with the ATO’s rules on attributing income. This way you can avoid paying more tax than you need to, and avoid double taxation.

Things to consider:

There are very specific rules when it comes to taking drawings and loans from a company. If you have taken money from your company without declaring it as a wage or a dividend, please reach out to us.

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5. Instant asset write-off and temporary full expensing

Temporary full expensing allows assets to be claimed in full, instead of being depreciated over a number of years. There is no value limit to access this write-off, as this was a COVID measure implemented by the government to encourage spending in the economy and reduce tax burdens on businesses.

The 2023 financial year is the final year that the temporary full expense is allowed. In the 2024 financial year, this proposed threshold will be $20,000.00.

Things to consider:

Standard cars have specific rules that may limit the deductibility of the vehicle. These limitations do not apply to commercial vehicles.
The asset purchased must be held, used, or installed, by the 30th of June 2023.

Learn more about how 2023-24 budget impact your small business.

6. Loss carry back tax offset

Another post-COVID measure, designed to increase cash flow for businesses at a time when many businesses were having trading disruptions. This allows companies that have a loss in the current year to obtain a tax refund on taxes paid in prior years.

Things to consider:

This offset works hand in hand with the above measures and works really well with the temporary full expense.
The 2023 financial year is the last year this offset will be available.

7. Consider your structure

Each year you should review your business structure to ensure it suits your needs. When considering your structure you need to consider: asset protection, tax planning, and succession planning.

Keep in mind each entity type has its pros and cons, and structures can include multiple entity types.

Learn more about this here: Business structures - what’s best for you?

Get your tax planning sorted with Beany

We are here to help with tax planning and minimisation. Your Beany personal accountant will simplify your financial year with deadline reminders and tax planning strategies, ensuring you pay as little tax as possible.

We have a dedicated team of certified accountants and a support team to take care of your business no matter where you are, so you can focus on growing your business. Looking out for you is what we are all about. Get started for free today.

Julian Hutabarat

General Manager, Beany Australia

I started my accounting career in 2012 and obtained my CPA in 2015. Outside of work I enjoy mountain biking and hope one day to ride Crank It Up! at Whistler.

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