3 Tax saving strategies to consider for the 2021 financial year!
Before the end of the year closes, we wanted to provide you with 3 tax saving strategies we would encourage you to consider and speak to your accountant about before it is too late! If you are a new client, please call us and speak to one of our specialists for a free consultation and quote to prepare your tax plan for 2021.
- Contributing to super & reviewing your prior year caps
Depending on your circumstances, you may be able to contribute into your superannuation fund to save on tax. The concessional contribution cap for the 2021 financial year is $25,000, which for the 2022 financial year is increasing to $27,500. As of 2020, carry forward rules now allow you to make extra concessional contributions, above the general concessional contributions cap without having to pay extra tax. This is limited the amount of your previous years cap that was unused. For example, you might have contributed $19,000 in 2020; this will allow you to contribute an extra $6,000 on top of your concessional cap of $25,000. This will result in a tax deduction of $31,000 and save tax at your marginal rates.
For those who are in the market to buy their first home, there are added incentives to this which you can find in our blog post here http://www.poolegroup.com.au/saving-tax-using-fhsss/
- Loss carry back tax offset
The loss carry back tax offset provides a refundable tax offset that eligible companies can claim in their 2021, 2022 & recently extended in the Federal Budget to the 2023 company tax returns. If you’re company had tax losses in 2020, you may be eligible to reduce your current year tax bill or even refund a portion of your tax bill you paid in 2019, limited to the surplus in your franking account as at 30th June 2021. This means, that if you are eligible and still haven’t paid or are paying off your 2019 tax debt than it may be time to talk to your accountant about potentially prioritising paying this tax debt off before the 30th June 2021 to either reduce your 2021 tax bill or even result in a refund.
- Temporary full expensing of assets
In the 2021 Federal Budget, they announced that temporary full expensing on business assets has been extended to 30th June 2023 (yet to be legislated). This means that depending on eligibility requirements, you may be able to claim the full tax deduction upfront on an asset you purchase for your business and therefore reduce the amount of tax you pay.
Disclaimer: This article is for educational purposes and is general advice only and should not be used to make investment or taxation decisions. Before making any investment or taxation decisions, you should speak to your financial advisor or accountant who will be able to tailor advice to your personal situation. Reach out to one of our in-house specialists today! All information is correct at the time of writing but may vary from year to year, and as legislation and interpretations change.