As the end of financial year approaches, it’s a good time to make sure your tax planning is in order so you can plan ahead for the future.
Tax planning is a crucial aspect of your personal and business finance, aimed at minimising tax liability while ensuring compliance with current laws. When completing your tax planning, we have put together a list of things to consider.
ATO interest charges no longer tax deductible
From 1 July 2025, the General Interest Charge (GIC) and Shortfall Interest Charge (SIC) will no longer be tax-deductible. This change will increase the after-tax cost of interest imposed by the ATO on overdue tax liabilities and shortfalls. The GIC— currently set at 11.17% per annum—applies to a range of unpaid tax and superannuation obligations, accruing daily. The SIC, currently charged at 7.17% per annum, applies to tax shortfalls resulting from amended assessments and is calculated daily from the original due date until the revised assessment is issued.
Instant asset write-offs
The limit for instant asset write-off is $20,000 and applies on a per asset basis.
Under this provision, small businesses with an aggregated turnover of less than $10 million may claim an immediate deduction for eligible depreciating assets costing less than $20,000, provided the assets are first used or installed and ready for use by 30 June 2025.
Review bad debts
Review your list of debtors to identify any amounts unlikely to be recovered. Writing off these bad debts before the end of the financial year can allow you to claim a tax deduction for that period.
Keep in mind, the debt must be truly unrecoverable—not just uncertain—and the decision to write it off needs to be properly documented before the financial year ends to qualify for the deduction.
Working from home deductions
The ATO has released updated guidance on an approved method individuals can use to calculate deductions for working-from-home expenses. This provides an alternative to the actual expenses method, which involves calculating the specific additional costs incurred while working from home.
From 1 July 2024, taxpayers can use the updated fixed rate of 70 cents per hour (increased from 67 cents) to claim deductions for working-from-home expenses, provided certain conditions are met. To be eligible, the individual must:
- Be performing substantial employment duties or actively running a business from home;
- Have incurred additional running costs that are deductible; and
- Maintain appropriate records to support their claim.
Deductions for superannuation contributions
For employers to claim a deduction for superannuation contributions (concessional contributions), the payment must be received by the fund on or before 30 June.
The Superannuation Guarantee (SG) rate rose to 11.5% of an employee’s ordinary time earnings from 1 July 2024 and is set to increase again to 12.0% starting 1 July 2025.
Super contributions
From 1 July 2024, the general concessional contributions cap rose to $30,000 for all individuals regardless of age. It was previously $27,500.
Many individuals may have unused contribution caps from previous years, which can offer a valuable chance to both enhance your tax position and increase your superannuation savings.
Individuals who want to claim a deduction for personal superannuation contributions must submit a notice of intent to their fund and receive acknowledgment before either lodging their tax return or by 30 June of the following income year, whichever comes first.
Next steps
At Nexia Australia, we can provide you with a thoughtful and strategic approach to tax planning, so you can better manage your finances and avoid surprises when its time to file your returns. Please contact your Nexia Advisor to discuss your tax planning needs.