With the end of the financial year fast approaching, we outline some tax planning opportunities, ensure your business is on top of its tax compliance, and explore the areas at risk of increased ATO scrutiny.
Opportunities
Instant asset write-off.
The government finally passed legislation increasing the instant asset write-off threshold for the year ending 30 June 2025 to $20,000. This was announced back in the 2024-25 Federal Budget, but the Government faced a number of hurdles in terms of passing the legislation.
Translation: If you're considering buying assets under $20,000 (per item) in the near future, consider buying them before 30th June.
There are certain conditions here, eg, the asset must be fully assembled and delivered, so please get in touch with us at hello@longboardca.com.au if you're unsure.
More info: https://www.ato.gov.au/about-a...
Write off bad debts.
If all attempts have failed to recover overdue sales invoices, the debt can be written off by 30 June to claim a tax deduction this year. Ensure that you document that you have written off the bad debt on your debtor’s ledger or with a minute.
Obsolete plant & equipment.
If your business has obsolete plant and equipment sitting on your depreciation schedule, instead of depreciating a small amount each year, scrap it and write it off before 30 June (the amount creates an additional tax-deductible expense).
Bring forward expenses.
If cash flow allows, consider bringing forward expenses such as directors’ fees (by resolution), employee bonuses, June quarter super (usually paid late July), and pay for them during June.
For small businesses, you can pay multiple other future expenses in advance, such as rent and software subscriptions. Don't hesitate to contact us if you're unsure, or you can check out: https://www.ato.gov.au/search-...
Risks
Tax debt and not meeting reporting obligations
Failing to lodge returns is a huge ‘red flag’ for the ATO that something is wrong in the business. Not lodging a tax return will not stop the debt escalating because the ATO can assess what they think your business owes. If your business has trouble meeting its tax or reporting obligations, we can assist by working with the ATO for you.
Professional firm profits
For professional services firms - architects, lawyers, accountants, etc. - the ATO is actively reviewing how profits flow to the professionals involved, looking to see whether structures are in place to divert income to reduce the tax they would be expected to pay. Where professionals are not appropriately rewarded for the services they provide to the business or receive a reward substantially less than the value of those services, the ATO is likely to take action.
Need support or have questions? Talk to us today about maximising your FY25 tax outcomes and reducing your risk.
Our Melbourne team: +61 3 9870 9050 or hello@longbaordca.com.au
