With a new financial year just around the corner, it’s time to look at all the options available to grow your business and your wealth. And there are plenty of opportunities to consider, especially with government incentives in place to get the economy up and running post-pandemic.
For example, to help businesses that were receiving JobKeeper, initiatives like the SME Loan Guarantee Scheme, which guarantees 50% of loans approved for small to medium enterprises by 31 December 2021, have been expanded and extended via the SME Recovery Loan Scheme. The loan size has increased from AU$5m to $10m, and lenders are allowed to offer an initial 24 month repayment holiday.
While these loans still require security, in the event you have to default and the bank repossesses, the government will step in and cover any shortfall. This lowers your exposure to the bank, which should translate to lower interest expense.
If you need funding for business growth, there are plenty of different loan products available, from secured commercial loans (that might use your family home as collateral) to secured and unsecured overdraft facilities that only require recent bank statements.
If your money is tied up, perhaps consider leveraging assets or arranging access to additional funds using an overdraft facility.
Instant Asset Write-Off
The instant asset write off was extended for a further year in the recent budget, making now a good time to think about investing in any new items of plant and equipment, including vehicles (note car depreciation limits apply).
The one-year extension means any business with a turnover or income of less than $5 million can immediately write-off the cost of the assets that they buy and first use or install by June 30, 2023.
While this may significantly reduce your tax bill in the year you make the purchase, to be sure, you should speak to your accountant before you make a decision – turnover limits apply and one year may be more beneficial than another to make the claim.
Full Expensing & Loss Carry Back
The Government has extended temporary full expensing and temporary loss carry-back for an additional year.
This extension means that if your business is experiencing COVID‑19 related supply disruptions, or considering investing in projects with long planning times, you can take advantage of the available incentives.
Now is a good time to identify any ‘bad’ debtors and write them off before the end of the financial year. If relevant, also write off any obsolete stock during your 30 June stocktake and consult your accountant regarding different stock valuation options that may minimise your tax.
Look for any expenses you can bring forward, like employee superannuation contributions, bonuses and invoices. Talk to your advisor about maximising your own personal deductible super contributions as well.
Review your borrowings, especially your home loan and look at the market to see what other lenders are offering. While your interest rate is very important, you should also consider whether your loan arrangement is meeting your current needs and is appropriate for any changes you foresee occurring.
Maintain a Positive Credit Score
However you manage your business or personal finances, it’s essential to keep your credit score under control so you can gain access to finance when you need it. Behaviours that can negatively impact your credit score include maintaining a high credit card limit; accepting increases to your credit card limit whenever offered; using buy now pay later products; and failing to pay bills on time. If you’re at risk of making a late payment, always call the supplier ahead of time to make an arrangement.
Always Get Advice
Before you make any decisions that could impact your tax liabilities, consult your accountant – this is critical to ensure you remain compliant with Australian tax and financial laws.
At the Ayers Group, our purpose built back-office and payroll systems can help you manage your business administration. We can also connect you with experts to help you maintain accounting compliance, and maximise your wealth.
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