Instant asset write-off, Small Business Incentives, Super Guarantee increase & More
Instant Asset Write-off to cease on 30 June 2023
‘Temporary full expensing’ has been in place as an investment incentive for eligible businesses to claim an immediate tax deduction for the cost (business portion only) of a depreciable asset.
To claim a full deduction in your business entity’s 2022/23 income tax return, the asset must be installed and ready for use by 30 June 2023.
If your business entity is not expected to produce sufficient taxable income to absorb the full cost of assets under Temporary Full Expensing, you may wish to consider:
· Timing – i.e. before or after 1 July 2023
· Availability of ‘Loss carry back’ tax offset (for companies)
· Opting out of Temporary Full Expensing on an asset-by-asset basis (if you’re not using Simplified Depreciation)
There are opportunities for tax planning in this area and it’s a good idea to get professional tax advice, particularly for large expenditure items.
What happens after 30 June 2023?
On 9 May 2023, the Australian Government announced it will temporarily increase the instant asset write-off threshold to $20,000, from 1 July 2023 until 30 June 2024. This measure applies to small business entities using Simplified Depreciation and is not yet law.
(Note: the instant asset write-off threshold is normally $1,000 and has been increased in prior years to various thresholds ranging from $6,500 to $150,000. Just to keep us on our toes!).
The $20,000 threshold is intended to apply on a per asset basis, so small businesses can instantly write off multiple assets.
Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year after that.
Don’t get fleeced by Business Name Renewals
If you have a registered business name, ASIC will contact you in the lead up to renewal time. This will often be via the email address used when you first registered the business name. If your email address has changed since then, you might not receive the renewal notice.
There is a fair chance, however, that you will receive a renewal notice in the post from a private company such as Registry Australia Pty Ltd or Registration Pty Ltd. These private companies usually charge two to three times the standard ASIC fee and many people are none the wiser.
To register or renew a business name, ASIC currently charges:
· $39 for one year or
· $92 for three years
Take charge of your business name. You can manage it yourself via ASIC Connect and from there you can update for any change to ownership or contact details. Or your ASIC agent can be appointed to manage your business name via ASIC Connect.
To check the status and expiry date of your business name registration, head to ABN Lookup, enter your ABN or business name and click on the hyperlink under ‘Business name(s)’. Or you can do a name search via ASIC.
For my existing clients, I manage business names for a minor additional cost. And any ASIC fees are on-billed without mark-up.
Superannuation Guarantee Increase to 11%
From 1 July 2023, the super guarantee increases from 10.5% to 11%.
This generally applies to the first pay run on or after 1 July 2023 and is not typically apportioned into pre and post 30 June components.
Check your payroll settings to ensure the rate will automatically increase when it becomes effective. A manual update might be require for some users, particularly if your payroll software hasn’t been updated recently.
REMINDER: To claim a tax deduction for superannuation contributions in this financial year, the superannuation funds must receive the contributions no later than 30 June 2023. It may take up to 10 working days for the contribution to be processed by your Clearing House, so best to get these paid by mid June. And don’t forget any remaining unpaid super for June must be paid by the Super Guarantee cut-off date of 28th of July.
Get set for a Minimum Wage increase
The Fair Work Commission has announced:
the National Minimum Wage will be increased to $882.80 per week or $23.23 per hour
a 5.75% increase to minimum award wages.
The increase applies from the first full pay period starting on or after 1 July 2023.
Small Business Technology Investment Boost and Skills and Training Boost
On 29 March 2022, as part of the 2022–23 Budget, the then Government announced it will support small business through these new measures.
These measures are not yet law. You cannot claim the boosts until the law is enacted.
If you intend to claim the small business technology investment or skills and training boost (bonus deduction), you can delay lodging your 2023 tax return until the law is enacted. Alternatively, you can lodge your return and claim your ordinary deduction for the technology investment or skills and training expenditure. Then, if/when the law is enacted, you amend your return to claim the 20% bonus deduction.
Trust Distribution Resolutions
Planning for your Discretionary Trust distribution of 2022/23 income should take place this month if it hasn’t already been done. Trustees need to make a resolution of how 2022/23 Trust Income will be distributed and this must take place no later than 30 June 2023, with the decision documented in writing.
If distributing income for the first time to a particular beneficiary aged 18 years or over, the beneficiary must quote their TFN to the Trustee and a TFN Report must be lodged by 31 July 2023.
Want advice specific to your circumstances in the lead-up to 30 June 2023?
Existing clients, please contact me by mid-June to allow time for considered advice and to avoid a last-minute rush.
Please note that I’m currently closed to new clients as my business is at capacity.
All the best as this financial year comes to a close.
Kathy Crotty
