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21 April
Activity statements
Activity statements
30 April TFN report
If you would like any accounting or BAS assistance please contact us - [email protected]
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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 - [email protected] 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 If you have been working from home from 1 March 2020 to 30 June 2020 you may be able to claim a deduction for some expenses that you have incurred during this period.
To claim a deduction, you must have spent the money and the expense must be directly related to earning your income. You cannot claim where you have been reimbursed by your employer. You can claim a deduction of 80 cents per hour for each hour that you work from home from 1 March 2020 to 30 June 2020 provided that you:
It should be noted that, the shortcut method covers all additional deductible running expenses such as:
If you use this method, you cannot claim any other expenses for working from home for that period. Like all tax deductions, ensure that you keep records of your claim such as timesheets or diary entries. It is important to understand that taxpayers have always been able to claim a tax deduction when they work from home provided they meet the eligibility criteria. This is a shortcut method and may not get you the best result. There are two other methods available to taxpayers depending on your circumstances. For more information contact GROWBC on [email protected] The instant asset write off for small businesses has been extended to
31 December 2020. The instant asset write off allows small businesses (businesses with an annual turnover of less than $500M) to claim an immediate deduction (up to $150,000 excluding GST) for new or second-hand plant and equipment asset purchases such as trucks, machinery, tools and office equipment. The threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets provided each costs less than $150,000. The asset must be in use or ready for use by 31 December 2020. The purpose of the $150,000 instant asset write off is to accelerate the speed at which you can claim deductions on your capital purchases. The deduction is effectively brought forward. Be careful with motor vehicles as they are subject to special rules applying both to the amount you can claim as a deduction and the GST you can claim. Contact us to discuss your businesses eligibility. [email protected] 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. |