1. Trust complexities continue to evolve
Throughout tax planning with our clients, we are observing trusts becoming subject to an increasingly complex set of requirements to remain compliant and within ATO guidelines. Recent court cases have confirmed that trustees have an obligation to consider the needs to the beneficiaries when considering trust distributions, or they could be subject to challenges.
The ATO have now issued their final ruling on Section 100A which confirms their view that it has a much broader application than was previously understood. This can result in distributions to low-income beneficiaries being disregarded for tax purposes, where it was never intended that they would receive the funds. The updated guidance on professional firm profit allocations is also applicable for the first time in the 2023 financial year. This means professional practitioners may be subject to ATO scrutiny where they do not meet certain benchmarks regarding average tax rates.
2. Temporary Full Expensing measure is set to end on 30 June 2023
To take advantage of this measure before it expires, ensure your new assets are installed ready for use by Friday 30 June 2023. If you are a small business entity with aggregated turnover below $10 million, a less generous instant asset write-off will apply from 1 July 2023 for assets costing up to $20,000.
3. Loss carry back measure finishes
The loss carry back measure introduced during Covid is also finishing and will not apply to 2024 income year losses.
4. Coalition small business measures expected, yet to be confirmed
We expect two of the small business incentives announced in the May 2022 Coalition budget to apply for the 2023 financial year, however be aware the legislation is still before Parliament.
The Small Business Technology Investment Boost provides an additional 20% deduction for expenses incurred on digitalising business operations to 30 June 2023, up to a maximum deduction of $20,000. The Small Business Skills and Training Boost provides an additional 20% deduction for expenditure on eligible external training courses to 30 June 2024. Both measures apply to businesses with aggregated turnover below $50 million.