As the end of the financial year approaches, there are some important things you need to consider before the end of June. We also flag some changes coming into effect soon and areas on the ATO radar this year. Please contact our office if you would like to discuss any of the following in more detail…
END OF FINANCIAL YEAR “SUPER” CHECKLIST
Contributions
- Consider topping up your concessional (before-tax) contributions (annual cap of $25,000) but ensure you complete the required documentation to validate your claim. You may also be eligible to take advantage of the “unused concessional cap carry forward” option if your Total Superannuation Balance is less than $500,000.
- Consider making additional non-concessional (after-tax) contributions, subject to limits. If eligible, an additional after-tax contribution may qualify you for a Government Co-Contribution of up to $500.
- Consider making a contribution on behalf of your non-working or low income spouse. A minimum contribution of $3,000 may entitle you to a maximum tax offset of $540.
Super Pension Payments
The 50% reduction in the minimum drawdown requirement is in place for the 2020-21 financial year for certain pensions (including Account Based Pensions and Market Linked Pensions). Ensure all minimum pension payments have been withdrawn from your SMSF or other pension super fund by 30th June 2021.
| AGE | CURRENT MINIMUM % | NEW REDUCED MINIMUM % FOR 2020-21 |
| UNDER 65 | 4 | 2 |
| 65-74 | 5 | 2.5 |
| 75-79 | 6 | 3 |
| 80-84 | 7 | 3.5 |
| 85-89 | 9 | 4.5 |
| 90-94 | 11 | 5.5 |
| 95 AND OVER | 14 | 7 |
GOOD NEWS
The 50% reduction in the minimum pension drawdown limit will be retained for the 2021-22 financial year
BEWARE: Some super funds have a cut-off date for accepting contributions and processing pension payment requests to be counted towards the 2021 financial year, so check with your individual fund for their specific requirements.
If you wish to check your eligibility for any of the above contribution strategies or check your minimum SMSF pension requirement, please contact our office.
END OF FINANCIAL YEAR “TAX” TIPS
Temporary Full Write Off of Capital Assets
Business depreciating assets acquired after 6 October 2020 and before 30 June 2023 can be fully deductible in the year in which the asset is first held. The cost of improvements to a depreciating asset can also be fully claimed in the year the improvement is made. So if you have been planning on buying a new asset for your business, you may wish to consider making use of the deduction in the 2021 income year.
Timing of Capital Gains Tax Asset Sales
Keep in mind that for CGT purposes a capital gain generally arises when a contract is signed and not when the sale proceeds are received. Bringing forward or deferring a sale to a different income year may have significant tax implications.
Investment Property Expenses
Depending on your personal situation, it may be helpful to bring forward certain rental property expenses such as repairs and maintenance, or speak to your lender about the possibility of prepaying loan interest up to 12 months ahead.
Claiming Working from Home During Covid-19
For the 2021 income year, the ATO have continued the temporary shortcut method for calculating working from home deductions. The deduction is calculated at a rate of 80 cents per hour worked and includes all expenses such as telephone, internet, electricity, computer consumables and depreciation of furniture and equipment. A time sheet or diary should be kept as a record of the number of hours worked.
ATO RED FLAGS FOR 2021
AREAS OF CONCERN:
- Cryptocurrency and declaring any capital gains. Further information about record keeping can be found on the ATO website.
- Rental property deductions, such as:
- Private use / holiday houses
- Purpose of any new borrowings
- Repairs vs capital improvements
- Inclusion of any capital expenditure in body corporate fees
- Work related expenses, such as:
- High deductions claimed compared to others in similar industries
- No link between the expense claimed and the type of employment
- No evidence of the expense such as receipts, logbook or diary entries
- Incorrect apportionment between private use vs work use
- Exact copying of deductions from the prior year
HOT TIP!!
With most businesses now using Single Touch Payroll, you may not receive a PAYG Payment Summary from your employer this year.
As your tax agent we can access it for you once it is finalised, or you can access it through your MyGov account if you have one.
NEW TAX RATES & OFFSETS FOR 2021
The 19% income tax bracket has increased from $37,000 to $45,000
The 32.5% income tax bracket has increased from $90,000 to $120,000
The company tax base rate has reduced to 26%
The Low Income Tax Offset has increased to $700
The Low and Middle Income Tax Offset of up to $1,080 is continuing for 2021
NEW THRESHOLD CHANGES FROM 1 JULY 2021
Super Guarantee Contribution increasing from 9.5% to 10%
Concessional Contribution Cap increasing from $25,000 to $27,500
Non-Concessional Contribution Cap increasing from $100,000 to $110,000
Transfer Balance Cap for new retirement phase pensions increasing from $1.6m to $1.7m
KEY DATES
| 5 JUNE | Extended due date for SMSF and company tax returns where non-taxable in both the prior and current year
Extended due date for individual and trust tax returns with a due date of 17th May |
| 30 JUNE | Last day to deposit contributions into your super fund for allocation and deductibility in 2021
Last day to withdraw your pension from your super fund and have it count towards your minimum requirement in 2021 |
| 1 JULY | Increase to Super Guarantee Contribution rate from 9.5% to 10%
STP reporting each payday now mandatory for all businesses |
| 14 JULY | Last day to finalise 2021 STP reporting for all businesses |
| 28 JULY | Due date for Super Guarantee Contributions for the quarter ended 30 Jun |
NUTWOOD PARTNERS OFFICE
Once again Victoria is under lockdown so we are working remotely from our home offices for the time being. We are hoping this is a temporary situation.
We are still able to work with you via phone, email, video or post to ensure that all your questions are answered and your lodgement obligations continue to be met.
Victorian businesses and employees impacted by the latest lockdown can apply for financial assistance from the State and Federal Governments. Please let us know if we can help in any way.