For Business, the best way to reduce your tax in Australia this year, is to take a closer look at the federal budget. Ticker’s money expert Dr Steven Enticott takes a look.
Treasurer Josh Frydenberg announced the government would be extending temporary full expensing and temporary loss carry-back (to the year 2019) for an additional year until 30 June 2023.
Further, Mr Frydenberg said the government will deliver more than $16 billion in tax cuts to small and medium businesses by 2023-24 with around $1.5 billion flowing in 2019 20.
This, he said, includes reducing the tax rate for small and medium companies, from 30 per cent in 2014 15 to 25 per cent from 1 July 2021.
For the best tips to reduce your tax, keep an eye on the Federal Budget.
Prepay your expenses where you can and don’t be too hasty getting out your invoices prior to June 30 even more so if it’s been a great income year. Its also a great time to purchase a business asset of any value to really boost your returns (or lower your tax bills!).
Stocktakes can be counted on Cost price, Replacement Price or even Actual values which is one of our greatest tax planning tools for those that carry stock. Get counting!
For Employees make sure you have paid for all your work-related expenses prior to June 30. Try to bring costs forward when you’ve had a great income year to smooth the tax pains.
Don’t forget – Sunglasses, Hats and Sunscreen for taxpayers that work in any outdoor occupation (including driving) they are tax deductible – Keep the receipts!
Claim Everything
This one each year is a bit tongue in cheek, though correctly claiming expenses is our expertise. Your job is to think of absolutely anything that has a connection with your incomes and let us measure the appropriateness of claim.
For Investors with repairs and maintenance on investment properties?Consider bringing forward so you can enjoy your tax deduction in the current financial year amongst other costs!
Pre-paying interest Say,on a loan of $300,000 it may cost $12,000 but it could get you up to $6000 back as a tax refund this year. Requires a negotiation with your lender!!
Made a capital gain during the past year, for example, the sale or part sale of a business (including investments the business has made), shares or a property.
If the answer is a ‘yes’ then you should be thinking about your options for managing the CGT liability.
Start by looking for capital losses (not hard at the moment) to offset the CGT liability (or losses carried forward from prior years) and consider selling out losses before June 30 to offset gains – call to discuss.
Medicare levy surcharge & Private Health Insurance Rebate thresholds
For the rates of Medicare levy surcharge that applies or the amount of rebate you are entitled to see the rebate and surcharge levels applicable are:
• Single parents and couples (including de facto couples) are subject to family tiers.
• For families with children, the thresholds are increased by $1,500 for each child after the first.
Australian Treasurer, Josh Frydenberg
Superannuation
Whilst there are no major changes for 2021 tax year the scheduled ones are going ahead.
• The Superannuation Guarantee rate is increasing to 10%, effective 1 July 2021
• From July 1st 2021 the concessional cap into super rises to $27,500 which includes super SG and salary sacrifices. Don’t forget personal super contributions can also be claimed as a deduction under the same limit.
• For under 67’s they may be able to also contribute $300,000* Non-Concessional all at once.
• For over 67’s they will need to pass the work test and be restricted to $100,000. Forget about it over 75 sadly.
• The limits rise to $110,000 annually and $330,000 for 3 years (below 67’s) from 1 July 2021
Superannuation has become so complex
We recommend that you never contribute until you’ve cleared it with your advisors first.
Super contributions to be claimed in this tax year they need to be paid WELL before June 30 (i.e., by mid-June – Do it Now!) and yes in many cases you should contribute to super for example;
An average earner saves around 20% of tax on their contribution so even if they put the money into the safe cash option of the fund, they have already had one great investment year!
However, if you are bit on the younger side burdened with a lot of bad debt then speak to us about doing the numbers on super contributions before you do.
Make larger super contributions
if you haven’t used all of your concessional cap in an earlier year. If you make or receive concessional contributions (CCs) of less than the annual concessional contributions cap of $25,000 pa, you may be able to accrue these unused amounts for use in subsequent financial years.
Unused cap amounts can be carried forward for up to five years before they expire.
2018/19 was the first financial year you could accrue unused cap amounts. To be eligible to make catch-up CCs, your total super balance at the prior 30 June must be below $500,000.
Superannuation Co-contributions for super is something you should still DO. Up to a 50% matching rate on up to $1,000 of after-tax contributions, so a maximum amount $500 FREE from the ATO into your super!! Income thresholds must be below $54,837
Superannuation Pensions remember, you need to have made your annual drawdowns by June 30 and the good news for 2020 and 2021 the minimum amount to drawdown has been halved. Maximum drawdown limits are unchanged.
Superannuation Spouse Contribution of $3000
The amount of the offset is 18 per cent of the spouse contribution you make (max. offset of $540) reducing your own tax. Spouse income must be under $37,000 to get the full offset, then it gradually reduces to zero at $40,000.
Again, there are always other conditions so check with CIA first or your Superfund to avoid disappointment.
In Short:
– Earnings reports from Tesla and Netflix might affect U.S. stock performance next week amid high inflation concerns.
– Increased market volatility arises from U.S.-China trade tensions and fewer S&P 500 stocks in an uptrend.
This coming week, earnings reports from companies including Tesla and Netflix are anticipated to impact U.S. stock performance.
Investors are also awaiting delayed U.S. inflation data, which could test market stability as it remains near record highs.Recent trading activity has shown increased volatility, influenced by ongoing U.S.-China trade tensions and concerns regarding regional bank credit risks. The CBOE volatility index has seen a rise, indicating increased market uncertainty.
The S&P 500 entered its fourth year of growth amidst these fluctuations, having previously experienced a period of calm. Experts suggest market risks are intensifying as valuations reach peak levels.
Market Volatility
Concerns regarding U.S.-China trade relations escalated last week when the U.S. threatened to raise tariffs by November 1 over China’s rare-earth export policies. President Donald Trump is scheduled to meet with President Xi Jinping in two weeks to discuss these issues.
Despite these challenges, major stock indexes gained ground over the week, with the S&P 500 up 13.3% year-to-date. However, a noticeable decline in the number of S&P 500 stocks in an uptrend raises caution among investors about underlying market weaknesses.
The upcoming third-quarter earnings will be closely monitored, especially as the government shutdown halts economic data releases. Companies like Procter & Gamble, Coca-Cola, RTX, and IBM are due to report. The delayed U.S. consumer price index is also expected to provide crucial insights ahead of the Federal Reserve’s monetary policy meeting on October 28-29.
In Short:
– Australia’s unemployment rate rose to 4.5% in September, the highest since November 2021.
– Economists note a cooling labour market, with fewer job ads and increased participation rate amid rising living costs.
Australia’s unemployment rate increased to 4.5 per cent in September, up from 4.3 per cent in August.It marks the highest seasonally adjusted unemployment rate since November 2021.
Economists suggest that the Reserve Bank should consider another interest rate cut next month. BetaShares chief economist David Bassanese noted a slowdown in employment demand as the labour market struggles to accommodate job seekers.
The number of officially unemployed rose by 33,900 in September, while the employment count increased by 14,900. The labour force expanded by 48,800 people, resulting in a participation rate rise of 0.1 percentage points to 67 per cent, returning to July levels.
In trend terms, the unemployment rate remained steady at 4.3 per cent.
Labour Market
BDO chief economist Anders Magnusson stated that while the unemployment rate has increased, the labour market is cooling, not collapsing.
He pointed out that the 14,900 jobs added in September were slightly below the average for the past year.
A growing participation rate indicates that rising living costs are prompting more individuals to seek employment. Magnusson said the release confirms a gradual cooling of the labour market that keeps the Reserve Bank on track without necessitating immediate action.
He added that hiring activity is slowing, signalled by a 3.3 per cent drop in job advertisements in September, the largest monthly decrease since February 2024.
Despite this, he does not foresee a rate cut in November.
In Short:
– Stocks rose on Monday after Trump expressed optimism about trade relations with China.
– The Dow Jones gained 621 points, with significant increases in tech stocks and broad market recovery.
Stocks gained ground on Monday, recovering from Friday’s decline after President Donald Trump expressed optimism regarding trade relations with China, stating they “will all be fine.”The Dow Jones Industrial Average rose by 621 points, approximately 70% of its previous loss. The S&P 500 experienced a 1.6% increase, nearing a 60% recovery of its earlier drop. The Nasdaq Composite increased by 2.3%, bolstered by rebounds in technology stocks.
Oracle’s stock surged over 5%, with AMD and Nvidia seeing 1% and 3% increases, respectively. Broadcom’s stock jumped 10% following the announcement of a partnership with OpenAI.
Trump’s comments hinted that he might not impose a significant increase in tariffs on China, which had previously caused market turmoil. Vice President JD Vance similarly indicated a willingness to negotiate with China, while also asserting that the U.S. holds advantages in potential trade discussions.
Broader Recovery
Monday’s trading saw a positive shift with four out of five S&P 500 stocks rising, indicating widespread recovery. Small-cap stocks also made gains, with the Russell 2000 rising over 2.5%.
Market concerns persist, however, with a government shutdown continuing and a major payroll deadline approaching on October 15. Earnings reports from major financial institutions, including Citigroup and JPMorgan Chase, are expected this week, potentially impacting market sentiment.