Carey Group Quarterly Newsletter

Tax Deductions

Prepay deductible expenses
Small business owners and individuals can prepay certain deductible expenses, like insurance premiums, professional subscriptions, or interest on business loans, and claim the deduction this financial year. This can help reduce taxable income before year-end.

Instant asset write-off for small businesses
Eligible businesses can immediately deduct the cost of assets under the instant asset write-off scheme (up to the relevant threshold for 2024). Ensure assets are purchased, installed, and ready for use by December 31st to claim them for this financial year.

Home office deductions
For those working from home, remember to claim a deduction for work-related expenses such as electricity, internet, and office equipment. The ATO offers options for calculating these, such as the fixed rate method or actual cost method (depending on eligibility). The temporary shortcut method, introduced during the pandemic, ended on 30 June 2022, so ensure you’re using the correct method.

Superannuation Contributions

Maximise concessional contributions
The concessional (before-tax) contribution cap is $27,500 for 2024. Contributions to superannuation funds (like employer payments or salary sacrifice) are taxed at a lower rate (15%), making this a tax-effective strategy. Be sure to make any extra contributions before the year ends.

Carry-forward unused concessional contributions
If your total superannuation balance is under $500,000, you may be able to carry forward unused concessional contributions from previous years (starting from 2018-19). This is a great way to maximise your tax benefits if you didn’t contribute up to the cap in prior years.

Non-concessional (after-tax) contributions
Australians can also make non-concessional contributions up to $110,000 per year. If you’re looking to build your super balance, consider making these contributions before December 31st, as they aren’t taxed when deposited into your super fund.

Government co-contributions
For low to middle-income earners, contributing to super from after-tax dollars may make you eligible for the government’s super co-contribution scheme. If eligible, the government contributes up to $500 if you make a personal after-tax contribution by year-end.

Capital Gains Planning

Offset capital gains with losses
Review your investments for any assets that have underperformed. Selling them at a loss can offset capital gains from other profitable investments, reducing your overall tax liability. Ensure you complete the sale by December 31st to apply it for the current financial year.

Hold assets for at least 12 months
In Australia, holding an asset for more than 12 months before selling qualifies you for a 50% capital gains tax (CGT) discount. If you’re considering selling investments, ensure you’ve held them for at least a year to benefit from this significant tax break.

Small business CGT concessions
If you run a small business and sell a business asset, you may be eligible for various CGT concessions, including the 15-year exemption, 50% active asset reduction, and retirement exemption. These can dramatically reduce or even eliminate the CGT on eligible business asset sales.

Taking advantage of these tips before the year ends can help you reduce your taxable income, grow your superannuation balance, and manage your capital gains more efficiently. By acting now, you’ll be in a stronger financial position as we move into 2025, with a clear plan for both short-term savings and long-term growth. Planning ahead pays off, so be proactive in wrapping up your financial matters before the December deadline.