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The motor vehicle depreciation cost limit has increased to $60,733 from 1 July 2021.
If a car is purchased for more than the cost limit, the maximum amount of GST that may be claimed is 1/11th of the prescribed cost limit, that is, $5,521 for 2021/2022. Contact us if you have any queries.
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Personal contributions If you are looking at making personal superannuation contributions for 30 June 2021, there are a few reminders to be conscious of, including the following:
Carry forward unused concessional contributions From 2019–20, carry-forward rules allow you to make extra concessional contributions – above the general concessional contributions cap – without having to pay extra tax. The carry-forward arrangements involve accessing unused concessional cap amounts from previous years. An unused cap amount occurs when the concessional contributions you made in a financial year were less than your general concessional contributions cap. To use your unused cap amounts you need to meet two conditions:
If, after applying all your available unused cap amounts, you still have excess concessional contributions, you may need to pay extra tax. Employer contributions A reminder for employers that superannuation contributions are deductible only once ‘paid’. While the June 2021 quarter superannuation guarantee contribution is not technically due until 28 July, many employers look to pay their June quarter superannuation contributions before 30 June to secure a tax deduction this year. Remember, merely accruing your superannuation contributions in your financial accounts is not enough to secure a deduction. The ATO has ruled that the contribution must be received by the fund to have been ‘paid’, so make sure that sufficient time has been allowed for the contributions to get to the fund. If you have any queries, please contact us. Paul and Helder As 30 June approaches, we would like to take this opportunity to remind trustees of annual tax issues to consider. Trustee Resolutions It is vital that a Trustee of a trust, particularly a discretionary trust make a valid trust resolution to distribute income before 30 June each year. Each trust will have different requirements and resolutions to be made prior to or by 30 June. Every Trust Deed is different. Valid trust distribution minutes must provide clear methodology of the determination of each beneficiary’s entitlement. Therefore, it is important that the minutes are prepared accurately and with reference to your trust. It cannot be stressed enough, read your deed. Distributable income of a trust should be calculated prior to 30 June, and signed trust minutes of the trustee’s resolution are required. Errors can be costly and result in the default beneficiary being taxed or the Trustee taxed at the highest marginal rate (45% + medicare levy). Particularly where capital gains and franked dividends are involved we strongly recommend the preparation of interim financial statements in order to assist the Trustee/s in drafting the desired resolution. TFN Reporting Trustees of closely held trusts are required to withhold tax from distributions made to beneficiaries who have not provided their TFN to the trustee before a distribution is made. Reporting obligations also arise. Trusts created during 2020/2021 or trusts with new beneficiaries (such as a new spouse, child who turned 18 or newly created corporate beneficiary) should report this information in a TFN Report to the ATO by 31 July. If a beneficiary does not provide their TFN before a distribution occurs, the Trustee must withhold at the highest marginal tax rate and pay the withheld amount to the ATO whilst lodging an annual report with the details of all withheld amounts. If you have any queries, please do not hesitate to contact us on contact@growbc.com.au we will be more than happy to assist. Cheers and we hope you had a great financial year! Paul and Helder 5 June
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Note: If you receive Child Care Subsidy and Family Tax Benefit payments from Services Australia, you and your partners must lodge your 2019–20 tax return by 30 June 2021, regardless of any deferrals in place. If you would like income tax and accounting advice, please contact us on contact@growbc.com.au 21 April
Activity statements
Activity statements
30 April TFN report
If you would like any accounting or BAS assistance please contact us - contact@growbc.com.au In his blog “when should you start looking for a new accountant” Helder discussed three factors when searching for a new accountant, today I look at one of those factors – timely advice.
There are good surprises and bad surprises. If we are surprised with something positive we may feel feelings of happiness or joy, whereas a bad surprise may make you feel anxious or disappointed. Most people would consider an unexpected income tax bill to be a bad surprise. But what if you could have mitigated the amount or at the very least expected or managed the outcome? You more than likely would have planned for it by re-allocating your business capital by setting aside money or bringing forward that long overdue machinery investment. GrowBC are not magicians, but we can help you estimate and manage the amount of income tax you will pay in a timely manner. By timely, we mean before 30 June each year – we hate delivering the news that you have unexpected income tax to pay 12 months after you could have taken any action. We cannot make your income tax go away – that is illegal, but we can provide strategies to manage your income tax or simply estimate your income tax payable. After all, income tax means that you have made a profit, so things can’t be all bad. Some Strategies
We are strong advocates of tax planning; however, just because Bob told you it is possible doesn’t make it so. It is vital that any tax planning strategy is well thought through and researched by a professional. Tax Planning is ideally done in April or May of each year, if you would like to schedule a 2021 Tax Planning session with GrowBC, contact us here. Paul Griffiths CA CTA Most businesses would be familiar with the requirement to report payroll information to the ATO each pay day using Single Touch Payroll (STP) software.
Two of the reporting concessions are:
As of 1 July 2021, these concessions will end. Closely held employees A closely held employee is an individual who is directly related to the entity from which they receive payments such as: Family members in a family business; Directors or shareholders of a company and; Beneficiaries of a Trust Many small businesses that pay a family member a wage have been using this current STP exemption. The ATO have advised that from 1 July 2021 an employer has three options with respect to its ‘closely held employees’:
If you use Option 3, employers must be careful not to under-estimate the amount reported, as this may lead to:
Small employers with only closely held employees have up until the due date of the payee’s tax return to make a finalisation declaration. Micro Employers From 1 July 2021, the quarterly reporting concession will commonly be considered for micro employers experiencing ‘exceptional circumstances’ such as serious illness or natural disasters (PS LA 2011/15). In addition, the following circumstances may be considered exceptional:
Your STP reports are due the same day as your quarterly activity statements. If you prefer to lodge monthly, the monthly STP reports must be lodged on or before the 21st day of the following month. STP finalisation declarations will need to be submitted by 14 July each year. If you require assistance with STP or the implementation of your STP software please contact GrowBC. Paul Griffiths CA CTA SME business owners need to solve many problems, be it restricted cashflow, HR issues, competitors, Covid 19 complications, etc, etc. The only positive that comes from being in these situations is, SME business owners are not alone.
A good Accountant provides SME business owners with guidance and expertise on how to weather problem issues. Whilst a great Accountant will work with SME business owners in establishing steps to avoid or prepare for potential business problems. So when should a SME business owner look for a new accountant? Some SME business owners are lucky enough to find an Accountant who is there from the start of the business until when it is sold or until when the SME business owner retires. Whilst there are some SME business owners who seem to change their Accountant every few years. We feel there are 3 factors that really set the tone for when a new Accountant should be found.
If the 3 factors of Trust, Timing and Value are not being met. Then it would be time to start looking for a new Accountant as those 3 factors are imperative for a SME business owner and an Accountant having a long and successful relationship. Helder Kacomanolis CPA From 20 July 2020, thousands of Western Australian small to medium sized businesses will begin receiving a one-off grant of $17,500 from the WA Government to help them recover from the impacts of COVID-19.
Eligibility Businesses with a payroll between $1M and $4M that are registered for payroll tax will be eligible for the grant, which is automatically sent to all qualifying businesses. Eligibility for employers not registered for payroll tax in 2018-2019 will be determined on their reconciled 2019-2020 Australian taxable wages. With the grants paid after the Annual Payroll Summary has been lodged. Other Support
If you require assistance, or are unsure if your business qualifies, please contact GrowBC - contact@growbc.com.au Paul Griffiths CA CTA From 1 July 2019, businesses will only be able to claim an income tax deductions for payments that are made to workers (employees or contractors) when the employer has complied with the pay-as-you-go (PAYG) withholding and other tax reporting obligations for that payment.
If the PAYG withholding rules require you to withhold an amount from a payment you must:
Note however that if the employer makes a mistake and withholds or reports an incorrect amount, they will generally not lose their deduction — as long as the ATO is notified and a correction is made. Type of payments affected includes:
Non-cash benefits A non-cash benefit is something that is provided instead of paying cash – for example goods or services. In this case, a business still needs to report to the ATO in order for this to be classified as a compliant payment and therefore allow the employer to claim an income tax deduction. The amount that you are required to withhold and send to the ATO is the amount you would have been required to withhold if the payment had been in the form of legal tender. You will need to use the relevant withholding tables. Mistaking an employee for a contractor There may be a situation where a business genuinely believes their employee is acting as a contractor, and so believes they are not obliged to withhold PAYG tax from payments as the “contractor” has provided their ABN. In this instance, the deduction won’t be lost if, at the time you thought they were a contractor, the business complied with both of the following obligations:
TIP: It is always good business practice to check the ABN on the invoice and to check that the contractor is registered for GST if they have charged GST. Penalties If you don’t comply with your PAYG withholding and reporting obligations for a payment, you may:
Paul Griffiths CA CTA |
AuthorPaul Griffiths is a Chartered Accountant with over 20 years assisting Australian Small Businesses with income tax, succession and tax planning matters. |