Pittwater Life June 2022 Issue

Business Life
Business Life: Money
Post-election, it’s time to get
your Financial Year sorted
This month a look at
what’s just ahead, plus
how to prepare for the
next financial year… As I write
this the outcome of the Federal
election is not known. Today’s
Sydney Morning Herald has the
headline: Unemployment rate
falls to lowest level since 1974;
Pauline Hanson contracts CO-
VID. I think the pairing of these
two items is seen by the editor
of the SMH as some sort of
good news headline.
The other headline that
caught my attention was: Unemployment
rate at lowest level
since Gough Whitlam was in
power. Now I can vividly recall
the Whitlam ‘It’s Time’ campaign
from the 1970s. There
was a catchy tune, a bit of an
earworm really, not as grating
as the Libs’ ‘hole in your budget
[my bucket]’ advertisement
that has been driving us nuts
at home for weeks but still very
memorable. Kids were chanting
‘we want Gough’ in the school
yard up at Elanora Heights Primary
School, none of us knew
why, it just seemed like the
thing to do. I don’t know if Albo
is quite Gough, but I see that he
wants to replicate the Whitlam
interim Government format so
that he and Penny Wong can
get over to an urgent overseas
meeting – a triumvirate though
instead of a duumvirate allowing
Albo and Wong to travel
while Richard Marles hangs
back and looks after the factory.
Gough was well known
for enjoying his trips so maybe
Albo is a chip off the old block
in that regard but it’s all academic
from where I sit; election
day is still a few days away.
What is absolutely clear is
that a new financial year will
be upon us in just a few
weeks and now is the
time to get a few things
sorted.
The time-sensitive
issues that need
consideration before
30 June are matters
such as maximising
superannuation
deductions, expense
prepayments or utilising
the instant asset
write-off provisions.
Superannuation in the
current financial year is deductible
as a concessional
contribution of up to $27,500
from all sources. Some people
with super balances below
$500,000 may be eligible to
make additional carry forward
concessional contributions
from as far back as five years
ago. Non-concessional contributions
(no tax deduction
claimed) are $110,000 p.a. or
$330,000 under the three-year
bring forward provisions. If you
are looking at tipping in the
maximum of $110,000 in this
financial year and $330,000
a few weeks away in the next
year you presumably already
have your ducks in a row.
Small business operators
should recall that compulsory
super is going up to 10.5% of
wages from 1 July. SGC and
deductible Super contributions
for this year need to be physically
paid before 30 June if you
wish to obtain the deduction in
the current year otherwise you
have until 28 days following the
end of the quarter (28 July) to
submit SGC contributions.
If you are considering prepaying
business expenses,
you need to do so before
30 June. There is a general
12-month rule, meaning the
with Brian Hrnjak
right or benefit paid cannot
extend beyond the earlier of:
12 months from the date the
prepayment is made; or the end
of the taxable year following
the taxable year in which the
payment is made. Prepayments
can be useful if you have had
an exceptional year and want
to average out slightly, if your
turnover rises you run the risk
of paying more in tax.
The instant asset writeoff
provisions for businesses
continue to apply
for this year and also
extend into next year.
The key to using these,
however, is that the asset
needs to be installed
(delivered) and ready for
use by 30 June. Ordering
and paying a deposit for
a car in the next few weeks
does not cut it.
It is important to have regard
for the motor vehicle
thresholds that can reduce any
write-off benefits. The first is
the motor vehicle price limit
which is $60,733 for the current
year. The second is any component
of private use (based
on your logbook), this needs
to be excluded from the writeoff
claim. On that topic, any
applicable Fringe Benefits Tax
or your employee contribution
to offset it should have been
calculated as at 31 March 2022
and may need to be included in
the June Business Activity Statement.
The car limit of $60,733 only
applies to the cost of passenger
vehicles designed to carry
a load of less than one tonne.
Commercial vehicles with a payload
capacity over this can be
exempt from this threshold and
may be exempt from FBT – astute
readers at this point would
have noticed the use of can
and may, two weasel words in
one sentence that indicates this
is complicated and should be
discussed with your accountant
beforehand. (It does however
go a long way towards explaining
how it is that we sometimes
have more Dodge RAMs around
here than an episode of ‘Yellowstone’.)
A few other things to be
aware of just after the end of
the financial year: the June
Business Activity Statement will
be due on 28 July if lodging
yourself or 26 August if lodging
through a tax agent.
Single-touch payroll (STP)
finalisation is generally due on
14 July. If you have less than
19 employees and they are all
closely held you have until the
tax return for the business is
due to finalise STP. Employers
with less than 19 employees
and with a mix of related and
unrelated workers have until 30
September to finalise for related
employees and 14 July for
unrelated workers.
The ATO have recently published
their focus list for the
next financial year. There is
continuing emphasis on record
keeping with data matching
employed to check the accuracy
of claims.
Work related expenses will
be another focus area for 2022
mainly because lockdowns
caused such an increase in
‘hybrid working environments’
and one in three returns are
likely to involve working from
home. They will be looking to
verify that a nexus exists and
that records are available.
Rental income is also being
looked at with checks on short
term accommodation activity
including the correct recording
of insurance payouts and
retained rental bonds. The calculation
of interest deductions
and use of redraw accounts are
also part of this review.
The other area that has been
well telegraphed by the ATO are
capital gains and losses from
shares, property and crypto
assets. The ATO has absorbed a
lot of data from banks, trading
providers and coin registries to
form a picture about what has
been occurring and they are
expecting to see more gains
and losses being reported than
in previous years. In practice
we have seen quite a spike in
activity in this area, particularly
regarding crypto currency and
NFTs with intended and unintended
consequences arising
from people swapping currencies
or making transfers to coin
registries or bank accounts.
Brian Hrnjak B Bus CPA (FPS) is
a Director of GHR Accounting
Group Pty Ltd, Certified
Practising Accountants. Offices
at: Suite 12, Ground Floor,
20 Bungan Street Mona Vale
NSW 2103 and Shop 8, 9 – 15
Central Ave Manly NSW 2095,
Telephone: 02 9979-4300,
Webs: www.ghr.com.au and
www.altre.com.au Email:
brian@ghr.com.au
These comments are of a
general nature only and are
not intended as a substitute
for professional advice.
Business Life
58 JUNE 2022
The Local Voice Since 1991
The Local Voice Since 1991
JUNE 2022 59