Opportunities for Your Business
Bonus Deductions
Various bonus deductions are available to small businesses in 2023-24, these include energy incentives, instant asset write-offs, and the skills and training boost. According to the Federal Budget announced in 2023-24, the increase to the instant asset write-off threshold allows small businesses with a total turnover of less than $10 million to deduct the full cost of eligible assets costing under $20,000. This measure has been extended to 30 June 2025 by the government.
The instant asset write-off threshold would be $1,000 without these measures. However, the implementation of the 2023-24 measure through legislation has been stalled in Parliament due to a disagreement between the House of Representatives and the Senate regarding the threshold amount and the inclusion of medium businesses (up to $50m). Likewise, the enactment of the $20,000 energy incentive, which offers an additional 20% deduction on eligible depreciating assets or improvements supporting electrification and energy efficiency enhancements in 2023-24, is pending approval.
A 20% bonus deduction is for eligible expenses incurred for external training given to your employees. Businesses with a total annual turnover under $50 million can access ‘skills and training boost’. To claim the boost, the training should have been offered by a registered training provider and registered and paid for between 29 March 2022 and 30 June 2024.
Write-off Bad Debts
If your client doesn’t pay you, the debt can be written off by 30 June. Therefore, document the bad debt on your debtor’s ledger.
Obsolete Plant & Equipment
Obsolete plant and equipment on your depreciation schedule must be written off before 30 June.
For Companies
Bring forward tax deductions by committing to directors’ fees and bonuses of employees and paying June quarter super contributions in June.
Risks
Tax debt and not meeting reporting obligations
If you fail to file tax returns, then it will be a red flag for the ATO that something is not going well in the business. Not filing a tax return will not prevent the debt from escalating because the ATO can issue an assessment of what they think your business owes.
Professional firm profits
For professional services firms – lawyers, architects, accountants, etc. – the ATO is reviewing the flow of profits through to the professionals involved, looking to check if the structures are in place to divert income to minimise the tax they would be expected to pay. Where professionals are not rewarded for the services they offer to the business, or get a reward that is less than the value of those services, the ATO may take action.