Maximise Your Benefits: End-of-Year Tax Planning Tips | 2023-24

Maximise your benefits: end-of-year tax planning strategies 2023-24

Last year, we published a blog with end-of-the-year tax planning advice, and it was well received. Because of this, we thought we’d do the same again this year.  

While many of the same strategies for minimising your tax liabilities remain the same, some have been removed as they’re no longer valid. We’ve also introduced new ones that you might be able to take advantage of before 30 June hits.  

Tax planning and reduction strategies and insights 

Top up your personal superannuation balances – You may be able to claim personal super contributions as a tax deduction and reduce your assessable income. These contributions are generally taxed at a concessional rate of 15%. This is typically lower than your marginal rate tax rate, which can go up to 47%.

Prepay rent or interest on your business loans – By prepaying these expenses, you can claim a deduction for them in the current financial year, reducing your taxable income and lowering your tax liability. The payment must not exceed a 12-month period. 

Give bonus payments to high-performing staff – Bonuses form part of your business costs and are, therefore, tax deductible. To qualify, you must be definitively committed to the payment of a quantified amount. 

Look at business restructuring opportunities – For example, if you’re eligible, consider rolling your business into a lower-taxed environment and taking advantage of capital gains tax concessions. This is not necessarily a pre-30 June action but can benefit future tax management.

Related: Are you meeting your fringe benefits tax obligations?

Make voluntary HELP debt repayments – By making voluntary repayments towards a family member’s HELP debts before 1 June 2024, you can avoid the indexation that would otherwise apply to any balance owing. 

Take advantage of personal income tax cuts – Proposed changes to the stage 3 tax cuts have now been passed by Parliament and will take effect from 1 July 2024.

Here’s a summary:

Income    Original stage 3 tax cuts    New stage 3 tax cuts

Source:   https://treasury.gov.au/tax-cuts

These tax cuts present a planning opportunity, giving you the possibility of deferring the timing of your income into the next financial year or prepaying expenses to take advantage of the personal tax savings. 

Delay dividends until next year – If you’re a private company considering declaring a dividend before 30 June 2024, it may be beneficial to delay the payment of the dividend until 1 July. This will allow it to be taxed to the individual shareholder under the proposed reduced marginal tax rates.

Carry forward unused super caps – The tax-deductible super contribution limit or cap is $27,500 for all individuals, increasing to $30,000 from 1 July 2024. If you have a balance of less than $500,000 at the end of June last year, you can make a deductible super contribution of your carried forward unused concessional contributions cap amounts from 1 July 2018. Unused amounts are available for a maximum of five years.

Related: Changes to super contributions from 1 July 24

While these tactics can help you reduce your liabilities, many require you to spend money to save on tax. Because of this, it’s important to review your cash flow position and forecast to ensure your business can fund them. 

Reduce your tax liability and stay compliant

By taking advantage of the various tax planning strategies and concessions available this year, you can reduce your tax liability and improve your financial position. 

Keeping detailed tax records is essential to support claims made through these tax reduction strategies, ensuring compliance and readiness for potential audits.

An experienced advisor can recommend the best strategies, help you review your cash flow position to ensure you have the funds to reduce your liabilities and inform you of the latest compliance rules so you’re not caught out. 

Reach out to your Maxim advisor or contact our team today to schedule a tax planning review of your position to ensure you get it right.