ARE YOU READY FOR TAX TIME?

Check with us regarding anything in this blog that you may feel you need to discuss with us, please make an appointment.

As we approach the start of a new financial year, it’s a good time to reflect on your record keeping over the past year. For example:

  • did you keep all the records you needed – for your income and to substantiate the expenses you were entitled to claim?
  • did you provide your tax or BAS agent with copies of everything they needed, and have you discussed your record keeping requirements with them?
  • what will you continue to do that’s working well?
  • what would you like to do differently?

You can claim the cost of record-keeping software as a deduction, so if it’s something you’d like to implement, consider setting it up soon for the coming financial year.

Check if there are any concessions you can access before 30 June. For example, you may be eligible for the small business restructure rollover concession and save on capital gains tax.

You can also find out more about the latest changes to concessions, such as different tax depreciation incentives (temporary full expensing, instant asset write-off, backing business investment and general depreciation rules), loss carry back and lower company tax rate changes.

Employers: don’t forget the Single Touch Payroll (STP) finalisation declaration for 2020-21 is due 14 July 2021. If you have any closely held payees, you have a later due date for those payees only.

Remember, registered tax and BAS agents can help you with your tax.

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How to avoid common mistakes in your returns

We know you want to get your tax right, so it may help you this tax time to know how to avoid making the most common tax mistakes.

To do this make sure you have:

  • declared all income, including cash and online sales, dividends, interest, capital gains or one-off transactions such as selling equipment
  • accurately recorded the value of goods taken for private use and directors’ fees or other money drawn out of your business
  • correctly apportioned expenses that are used both privately and in your business, including adjusting your rent expenses if you store personal assets at your business premises
  • only claimed expenses you’re entitled to claim, for example capital improvements can’t be written off as a repair
  • correctly claimed any business losses.

It’s important to have good records that are up to date. It can help to have a dedicated business bank account to help keep business transactions separate from your other finances.

If you have a tax agent, you can also consider speaking to them more regularly so they can keep you up to date and provide you with professional advice.

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Record keeping for small business

What to include in your business’s assessable income

Using stock for private use

Using your company’s money or assets

Business tax deductions

Business losses

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Tips to help get your BAS right

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When completing your next business activity statement (BAS), remember:

  • Keep accurate and complete records of all sales, fees, expenses, wages and other business costs.
  • Use our Record keeping evaluation tool to help you assess how well you’re keeping your business records.
  • Only lodge one BAS for each period. If your form has been replaced, you should use the replacement form and not the original.
  • If you lodge electronically, there’s no need to send us the paper form.
  • Only complete fields that apply to you. If you have nothing to report, enter zero.
  • Make sure that you have entered the figures for your obligations at the correct label.
  • Enter whole dollar amounts – leave cents out and don’t round up to the next dollar.
  • Lodge online and you may get an extra two weeks to to lodge and pay your BAS.
  • Registered tax agents and BAS agents can help you.

Remember, if you’ve made a mistake you can revise or fix the mistake on your next BAS.

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Paying your tax bill just got easier

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We’ve improved how you can use and manage your credit or debit card details in Online services for business, making it easier to pay your tax or super bill.

The new payment features allow you to:

  • add and manage up to three credit or debit cards in your account profile
  • set up a payment plan with automatic direct debits from a card
  • make one-off payments using a card.

Online services for business offers a simplified process to make it easier for you to create a payment plan if you owe less than $100,000.

If you set up a payment plan in Online services for business, the system will give you a recommended plan. The plan will include an upfront amount to pay as well as your instalment amounts. You can accept the recommended plan, or tailor it to your needs.

When setting up your payment plan, you can opt-in to receive reminders for your payment plan instalments via SMS or email.

If you’re worried you’ll have difficulty paying on time, or are having trouble setting up a payment plan online, contact us  for help.

Business Portal retires at the end of July

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All good things come to an end, and our Business Portal retires at the end of July 2021. Improved technology means we can now offer you a better digital service experience including a range of new features.

Online services for business is the new way to interact with us online for all your tax and super needs. It’s been designed in collaboration with small businesses like yours, for small business.

There are many reasons you’ll be glad to switch. Online services for business allows you to:

  • organise a payment plan for amounts owing up to $100,000
  • obtain copies of income tax returns
  • manage multiple ABNs with a single log in
  • interact with us using secure-mail
  • save time when lodging your BAS.

You can log in easily and securely with your myGovID.

After July, you won’t be able to use the Business Portal anymore. With Online services for business we guarantee you won’t miss it!

Are you ready for the super guarantee rate rise?

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On 1 July 2021, the super guarantee (SG) rate will rise from 9.5% to 10%.

If your small business has employees, you’ll need to ensure your payroll and accounting systems are updated to incorporate the increase to the super rate.

For salary and wage payments made on or after 1 July 2021, the new superannuation guarantee contribution rate of 10% will apply.

Super guarantee contributions for the quarter ending 30 June 2021 should be calculated at the old rate of 9.5%.

If you require help to work out how much super you need to pay your employees after 1 July, you can use our SG contributions calculator.

It’s important you pay your workers the correct amount of super. Our SG eligibility decision tool will help you determine if your employees are eligible for super, including any contractors treated as employees for super purposes.

The super rate is scheduled to progressively increase to 12% by July 2025.

The scheduled rate increases and dates are on our website.

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Did you receive JobKeeper this financial year?

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JobKeeper payments are taxable, so you need to include them in your tax return.

If you’re a sole trader, partnership, company or trust that’s received JobKeeper payments, we’ll contact you or your registered tax agent by early July to let you know:

  • the total amount of JobKeeper payments your entity received since 1 July 2020, or where you can find out
  • where to report JobKeeper payments in your tax return.

From early July, sole traders who’ve received JobKeeper payments for themselves and any eligible employees will also be able to find the total amount of JobKeeper payments they’ve received through Online services for business and myTax. Their registered tax agent will also get this information.

The amount will be provided as ‘information only’ and will not be mapped to a label.

Here are some important points about including JobKeeper payments in your return:

  • You don’t need to include any JobKeeper payments that you’ve already repaid (or are repaying to us) in your return.
  • You should review and cross-check the payment amounts against your own records to make sure they’re accurate.

Remember, registered tax agents can help you with your tax.

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Need help as COVID continues?

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We know that many businesses and communities are being heavily affected by the challenging economic conditions created by continuing COVID-19 outbreaks and restrictions.

If you’re having difficulty meeting your tax and super obligations because of COVID-19, we can help.

It’s important to lodge on time, even if you can’t pay by the due date. This will give you certainty of your tax and super position with us, shows you’re aware of your obligations and doing your best to meet them.

We have a range of support options available for you, depending on your situation. This includes tailored payment plans that allow you more time to pay.

Visit our website for more information on support the ATO can provide. Our online services also give you access to a range of tax and super services in one place such as lodging your activity statements and tax returns, paying your tax bills as well as creating and managing payment plans.

If you need help to lodge on time, call us to discuss your situation as soon as you become aware that you may.

Remember, tax agents and BAS agents can help with your tax.

Next steps:

  • Support in difficult times
  • Contact us immediately if you are experience difficult times we will negotiate with the ATO on your behalf, better to address the problems immediately as they arise, the ATO and our firm will work together to assist you in a time of crisis. Call us on LL 02 5698 5261 OR Mobile 0467 199 703
  • Support for small businesses

Use tax incentives to help your business grow

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Tax time’s just around the corner, don’t forget the range of tax depreciation incentives which you may be able to claim for your business’s assets.

Temporary full expensing allows businesses to claim an immediate deduction for the business portion of eligible new depreciating assets.

Small businesses can also claim an immediate deduction for the business portion of eligible second-hand depreciating assets.

The asset must be first used or installed ready for use for a taxable purpose between 7.30pm AEDT on 6 October 2020 and 30 June 2022.

Instant asset write-off also allows an immediate deduction.

The threshold for each asset is $150,000 for assets purchased by 31 December 2020 and first used between 12 March 2020 and 30 June 2021. Different thresholds and eligibility apply before 12 March 2020.

Backing business investment allows eligible businesses to claim the cost of new depreciating assets at an accelerated rate.

It applies to the 2019–20 and 2020–21 income years.

Only one incentive can apply for each asset, so you should determine which incentive is right for your business.

There’s further information available in a comprehensive factsheet on our website.

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Cars and tax

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From 1 July 2021 the following car threshold amounts apply.

Income tax:

  • There’s an upper limit on the cost you use to work out the depreciation for the business use of your car or station wagon (including four-wheel drives). You use the car limit that applies to the year you first use or lease the car.
  • The car limit for 2021–22 is $60,733.

Goods and services tax (GST):

  • Generally, if you purchase a car and the price is more than the car limit, the maximum amount of GST credit you can claim is one-eleventh of the car limit amount which in 2021–22 is $5,521.
  • You can’t claim a GST credit for any luxury car tax you pay when you purchase a luxury car, regardless of how much you use the car in carrying on your business.

Luxury car tax (LCT):

  • From 1 July 2021 the LCT threshold will increase to $ $69,152.
  • The LCT threshold for fuel efficient cars will increase to $79,659 for the 2021–22 financial year.
  • Remember, the LCT value of a car generally includes, the value of any parts, accessories or attachments supplied or imported at the same time as the car.

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Withholding the right amount for seasonal workers

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Due to COVID-19, the visa status of workers in the Seasonal Worker Program may have changed, resulting in you withholding tax at a higher rate.

The law has now been changed so that you can continue to withhold 15% on payments made to workers where they:

  • have been participating in the program and continue to do so
  • were previously on a subclass 403 visa
  • are now on a different temporary visa (e.g. subclass 408 visa).

If you have withheld tax at a higher rate for a seasonal worker because their visa has changed, you will need to refund your employee the over-withheld amounts. This may include refunding the amount directly to your employee or revising activity statements you’ve already lodged.

If you withheld tax at a higher rate during the 2019–20 financial year, your employee will need to request a refund of withholding tax from us.

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*All information supplied by the ATO. The information supplied is extensive and is not there to over provide you with data. You will need to seek our services to interpret some of this information. The most important thing to do is have a cursory review then record questions you would like answered. Our Taxation Associates will go through in detail everything you need to know. Your first contact is  LL 02 56 98 261 or Mobile 0467 199  703 or enquiries@babks.com.au

Our Address is Level 1   9 Park Avenue Coffs Harbour NSW 2450