Tax time 2021-22: Tax Planning PART 2

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Part two of this three-part series explains temporary full expensing and superannuation strategies for the 2021-22 tax time.

Click HERE for Part one.

Temporary Full Expensing

As part of the recent 2021–22 Federal Budget, the Australian Government announced it will extend the temporary full expensing for an additional year.

Taking advantage of depreciation measures, such as temporary full expensing allows eligible businesses to deduct the full cost of eligible depreciating assets of any value, in the year they are first held, first used or installed ready for use for a taxable purpose. 

The cost of improvements to existing eligible depreciating assets made during this period can also be fully deducted.

Small and medium businesses, with turnover less than $50 million, are also able to immediately write-off second-hand assets. Remember – assets must be installed and ready for use by 30 June 2022.

To find out more on the guidance material and eligibility criteria click HERE or contact Elevate Accounting for an obligation free chat.

Small Business Tax Concessions

Tax concessions available to Small Businesses include:

• Immediate deduction for prepaid expenditure when payment covers a period of less than 12 months. 
• Immediate deduction for certain costs incurred in relation to establishing a business.
• Simplified rules for trading stock.
• A Small Business tax offset for individuals up to a maximum of $1,000, calculated as 16% of the tax payable on any Small Business net income (turnover under $5 million).

Superannuation strategies

Concessional superannuation contributions

Concessional contributions are contributions that are made into your super fund before tax. They are taxed at a rate of 15% in your super fund.

From 1 July 2021, the concessional contributions cap is $27,500. The increase is a result of indexation in line with average weekly ordinary time earnings.

For more about Concessional contributions and contribution caps HERE or contact Elevate Accounting to see how this can apply to your business.

Superannuation deductions

Maximise your superannuation deductions before 30 June 2022 by:

• Ensuring superannuation contributions for employees are paid and cleared by 30 June 2022;
• If your superannuation balance is less than $500,000 and you’ve made concessional contributions of less than the concessional contributions cap of $27,500, you may be able to make additional concessional contributions in subsequent financial years for any unused amounts. Unused cap amounts can be carried forward for up to five years. 
• Earn less than $56,112 p.a? You could be eligible for the government co-contribution. The government will contribute 50 cents for every dollar of after-tax contributions you make to your superannuation fund up to a maximum of $500. The full benefit is available for income earners under $41,112 and phases out where adjusted taxable income is between $41,112—$56,112.

Find out more

To find out more on these tax strategies and how they apply to your business this tax time, contact the team at Elevate Accounting HERE or call us (08) 9460 1040 for an obligation free chat.