14th June 2023
2023 Tax Planning
As the financial landscape evolves, it's essential for individuals and businesses to keep up to date on relevant tax planning strategies.
In 2023, several key provisions have been introduced to assist Australians in optimising their tax positions.
Superannuation (Unused Concessional Contribution Cap)
Superannuation continues to be a tax-effective investment option and if you feel that you have missed the opportunity to take full advantage and maximise your superannuation contributions, you may have a second chance.
Individuals can carry forward their unused concessional contribution caps for up to five years, which means that if you haven’t fully utilised your concessional contribution cap for the past five years, you can carry forward the unused amount and contribute it to your superannuation in 2023.
This presents an excellent opportunity to boost your retirement savings while potentially reducing your taxable income.
Temporary Full Expensing
The temporary full expensing measure introduced by the Australian government during the recent pandemic ends on 30 June 2023.
Eligible businesses can claim an immediate deduction for the full cost of eligible assets acquired after October 6, 2020, and used or installed by 30 June 2023. This includes assets such as machinery, equipment, and vehicles.
By taking advantage of this measure, businesses have the ability to accelerate deductions and reduce their taxable income, whilst stimulating economic growth.
Skills and Training Boost
The Skills and Training Boost initiative aims to enhance workforce skills and support businesses in upskilling their employees.
Eligible businesses will be able to deduct an additional 20% of expenditure that is incurred for the provision of eligible external training courses to their employees by registered providers in Australia.
This incentive not only encourages businesses to invest in training but also provides potential tax benefits and a skilled workforce for the future. The boost applies to eligible payments between 29 March 2022 and 30 June 2024. This measure is not yet law.
Small Business Technology Investment Boost
The Small Business Technology Investment Boost provides small businesses with a valuable opportunity to invest in digital technology and boost productivity.
Eligible small businesses will be able to deduct an additional 20% of the expenditure incurred for the purposes of business digital operations or digitising operations on business expenses and depreciating assets such as portable payment devices, cyber security systems or subscriptions to cloud-based services. The boost applies to eligible payments between 29 March 2022 and 30 June 2023. This measure is not yet law.
It’s crucial for businesses to review their payroll systems and adjust contributions accordingly to meet the updated obligations and pay any superannuation amounts before 30 June 2023 to claim the deduction in the 2023 Tax Year.
Prepaying certain expenses before the end of the financial year (or ordering goods and receiving the bill) can allow you to bring forward deductions, thus reducing taxable income in the current financial year.
Deferral of Income
For individuals and businesses with flexible income arrangements, there may be an opportunity to strategically time taxable income and defer the associated tax liability to the following financial year. In today’s high interest rate environment, this can be particularly useful in relieving some of the pressure on cashflow.
Superannuation Guarantee Increase
The superannuation guarantee (SG) rate is set to increase to 11% from 1 July 2023. Now is the time to review payroll systems and make the necessary adjustments to accommodate the increasing SG contributions.
As tax regulations are complex and subject to change, our team can work with you to ensure compliance and make informed decisions tailored to your specific circumstances.