The new financial year tax updates bring significant changes for businesses, including revised employer obligations with an increased Superannuation Guarantee rate. Small businesses can capitalise on new deductions for energy efficiency and skills development.
As we move into the latter part of 2024, it’s essential for businesses to stay informed about the latest tax updates. These changes have significant implications for employer obligations and provide new opportunities for small business tax deductions. Here is an overview of the key tax updates you need to know for September 2024:
Updated employer obligations
Employers must remain vigilant in adapting to recent legislative changes affecting payroll systems. As of 1 July 2024, the Superannuation Guarantee (SG) rate has increased to 11.5% of ordinary time earnings[i]. This change affects all payments to superannuation accounts for eligible workers, starting with those for the July to September quarter. Employers should ensure their payroll systems are updated to reflect this new rate to remain compliant.
Additionally, individual income tax rate thresholds and tax tables have been revised. Employers are advised to review and adjust their Pay As You Go (PAYG) withholding calculations to align with these changes. Keeping payroll systems up to date will help avoid any compliance issues and ensure accurate employee pay slips.
Opportunities for small business deductions
The government has introduced incentives to encourage energy efficiency and skills development within small businesses. The Small Business Energy Incentive offers a 20% bonus tax deduction for new assets or improvements to existing assets that promote efficient energy usage. To qualify, these assets must be first used or installed ready for use between 1 July 2023 and 30 June 2024[ii]. This incentive not only supports sustainable practices but also provides a significant tax advantage.
Eligible expenditures on external training courses for employees, incurred between 29 March 2022 and 30 June 2024, can also qualify for an additional 20% deduction under the Small Business Skills and Training Boost[iii]. This initiative is designed to enhance workforce capabilities, offering businesses a dual benefit of upskilling their teams while enjoying tax savings.
Reducing capital gains tax
Businesses looking to minimise their capital gains tax (CGT) should be strategic about utilising capital losses. Capital losses from the current or previous income years can offset capital gains, but specific rules apply[iv]. Carried-forward losses must be used first, and losses from collectables can only offset gains from similar assets. Personal use assets and certain CGT-exempt assets, like cars and motorcycles, are not eligible for offsetting.
It’s crucial for businesses to carefully document and manage their capital losses to optimise their tax positions. Properly leveraging these offsets can significantly reduce taxable capital gains, leading to potential tax savings.
Maintaining records for rental expense claims
For rental property investors, maintaining comprehensive records is crucial for substantiating expense deductions. The ATO requires receipts, invoices, bank statements, and details on how deductions were calculated and apportioned[v]. Without these, claims may be deemed invalid, leading to adjustments or penalties.
Investors should implement robust record-keeping practices to ensure all eligible expenses are captured and can withstand scrutiny. This diligence not only supports valid claims but also helps in efficient tax planning.
Lodging a ‘nil’ Business Activity Statement (BAS)
Businesses registered for GST must lodge a Business Activity Statement, even if they have nothing to report. In such cases, a ‘nil’ BAS is required by the due date[vi], which you can do online or through the ATO’s automated phone service. Failure to lodge a BAS, even if it’s nil, can result in penalties.
Ensuring timely lodgement helps businesses maintain good standing with tax authorities and avoids unnecessary fines. Regularly reviewing compliance obligations will facilitate smooth business operations and financial planning.
These tax updates present both obligations and opportunities for Australian businesses. Staying informed and proactive in adapting to these changes can lead to better compliance and potential tax savings. Whether it’s updating payroll systems, claiming new deductions, or ensuring accurate records, a strategic approach to these updates will benefit businesses in the long run.
If you would like more information or further clarification on the new tax measures and how they affect you, or if you need help with your tax return, contact our office today.
DISCLAIMER: All information on Focus Wealth Advisers is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider your personal circumstances and seek professional advice before making any decisions based on this information.
[i] ATO (2024) How much super to pay
[ii] ATO (2024) Small business energy incentive
[iii] ATO (2024) Small business skills and training boost
[iv] ATO (2024) Pay less capital gains tax (CGT)
[v] ATO (2024) ATO warning to rental property owners: don’t let your tax return be a ‘fixer-upper’
