Knight 2021 Tax Planning Guide – Individuals

Individuals / Investors / Trusts

  • Pay any super contributions intended for the 2021 year by 23 June (so they are cleared to the superfund account by Wednesday 30 June.
    You will need to subtract from the threshold any employer superannuation (including super guarantee) that would have been physically paid to your respective funds in the 2021 financial year when calculating the remaining concessional cap of $25,000.
  • You are able to claim a full deduction for personal super contributions you make to your superfund, and you do not need to do this through salary sacrifice, even if you receive employment income.
  • Make sure your motor vehicle log book or work-related travel diary is up to date to substantiate any work related expenses deductions. If you claim a tax deduction for work related motor vehicle expenses, you should note your odometer records at 30 June each year so that you can calculate the kilometres travelled. Maintaining a logbook of work-related use of your vehicle will usually maximise the tax deduction you can claim. If your current logbook is 5 years old you will need a new one for a continuous 12 week period.
  • Ensure you have provided your accountant with details of the expected 2021 income and gains for your Trust and for any intended beneficiaries so that you can determine the most tax effective distribution of 2021 Trust Income and Capital Gains.
  • Any JobKeeper payments received from your employer will be included, together with any tax withheld, in your annual PAYG payment summary.

Recent changes to legislation: –

Tax

  • Resident Tax Rates for 2020-2021
Taxable IncomeTax on this income
0 – $18,200Nil
$18,201 – $45,00019 cents for each $1 over $18,200
$45,001 – $120,000$5,092 plus 32.5 cents for each $1 over $45, 000
$120,001 – $180,000$29,467 plus 37 cents for each $1 over $120,000
$180,000 and over$51,667 plus 45 cents for each $1 over $180,000
  • In addition, low and middle-income earners will receive an additional benefit of up to $1,080 from the low and middle income tax offset.
  • Tax rates for 2022FY will remain the same as 2021FY
  • From 1 July 2024, there will be a new 30% tax bracket from $45,000 to $200,000
  • Home office deductions – Individuals have a choice to apply the normal fixed rate of $0.52 cents per hour or the increased rate of $0.80. The Government has extended the shortcut rate to 30 June 2021. The new rate was introduced initially for the period from 1 March to 30 June 2020. You may have a higher claim by using the old lower rate and the actual work-related costs of phone, internet etc.
  • Residency rules are expected to be reformed. Bright-line test of 183 days test will be used for individuals to determine their residency status. If the individual was not in Australia for 183 days, secondary tests will apply. Secondary tests will be based on physical presence and objective criteria.
  • Employee share acquisition scheme – cessation of employment will no longer be a deferred taxing point. Employers can now design schemes for employees to keep the interests after cessation. Please contact us for further details on the new taxing points.
  • Self-education expenses – the $250 deduction will be abolished

We welcome your call to discuss tax planning for you individually as well as your business.