2022 Tax tips – How to Engineer a Tax refund this year
Did you know that the combination of the Loss Carry Back and the Temporary Full expensing provisions may help you engineer a tax refund this year?
The Loss Carry Back Tax offset allows eligible business who have experienced a tax loss in the 2020 -2021 tax year, to offset this against taxable income in previous selected years. Click here to learn more about Loss Carry Back
Temporary Full Expensing allows eligible businesses to immediately deduct the business portion of the cost of eligible depreciating capital assets. Click here to learn more about temporary full expensing
If you combine these you may be able to turn a 2021 – 2022 taxable income into a tax loss and then engineer a tax refund this year.
An example:
2020 – 2021 expected taxable income pre any temporary full expensing | $30,000 |
Eligible depreciating asset cost | $50.000 |
Adjusted tax loss after deducting cost of eligible depreciating asset | $20,000 |
Taxable income 2019 – 2020 | $30,000 |
Potential cash tax refund (assuming sufficient franking account balance) | $5,000 |
In this example you spent $50,000 to purchase an eligible depreciating asset that the business needed and you got an upfront tax refund of $5,000.
If you want some help to understand your business finances, contact me below.
Contact Wayne Wanders for your FREE Business Survival Session
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Wayne Wanders, A Real CFO
wayne@aRealCFO.com.au