End of financial year is upon us. This year might be more challenging than most, with changes made to taxation laws, tax offsets and concessions, changes to STP, not to mention the creation of JobKeeper and the introduction of JobMaker. Over and above all that, you want to minimise your tax bill and make sure you’re saving any extra business costs you can.
What are our top 6 tips and tricks to making sure you’re EOFY 2021 ready.
STP (Single Touch Payroll)
Recent changes to STP reporting mean that small businesses who have closely held employees and micro employees must report using STP to the ATO from 1 July 2021. Employers can choose to report each pay day, monthly or quarterly.
From 1 July 2021, quarterly reporting concessions for micro employers will only be available when reporting through a registered tax professional, or who meet certain eligibility requirements which now include the need for exceptional circumstances to exist.
Don’t forget to tell your employees that they will no longer receive a payment summary for their tax and that they are aware of the changes.
Click here to read a detailed report on recent STP changes
Because there have been many changes occurring to the way the ATO requires reporting to be lodged, it’s a good idea to have your financials up to date to avoid confusion. Early preparation can help you avoid delays. With the tax concessions and offsets available to small business this year, it’s a good idea to lodge your businesses tax return as soon as possible to take advantage.
The best way to reduce errors is to make sure that the information that is input is accurate. Good software and a bookkeeping system will go a long way to make end of financial year reporting a lot easier.
Over 90% of small businesses use a tax agent to lodge their tax return, and there are good reasons for it. The core job of a tax agent is to provide tax advice to minimise the tax individuals and businesses are obligated to pay. We will all need to pay tax, but you are fully entitled to minimise the amount you need to pay.
Not only have tax agents kept on top of changes and rulings throughout the year – they understand how to utilise them to your advantage. Some of the best advice you can get is only a phone call away. You can claim fees from professionals as a tax deduction for managing your tax affairs.
Your tax agent will know how to claim the temporary full expensing of assets and loss carry-back measures for companies. The best news is, that a bookkeeper will alert you ahead of time if there’s anything missing or if any red flags are raised that can be dealt with along the way.
As a small business, if you received JobKeeper for your employees, you’ll have to have paid and reported on your BAS in the first 14 days after the month in which you received it. Your BAS or tax agent will have reported this for you. Don’t forget that JobKeeper is not subject to GST.
JobKeeper is deemed assessable income which will need to be reported on your individual tax return. The payments will be reported in your income statement. A tax agent can access the ATO data and your information when you lodge your tax return through them.
Many people transitioned to work from home during lockdown periods, and a good percentage still choose to work from home fully or at a reduced rate. The ATO introduced a flat rate of 80 cents per hour to claim working from home costs, and will be available to claim your working expenses in this method from 1 March 2020 to 30 June 2021. Note that you cannot claim mobile phone and internet costs on top of the 80 cents per hour simplified rate.
This approach might not be for everyone. It will pay to speak to someone who can crunch the numbers for you and work out which method of claiming tax deductions will work out in your favour.
Click here to read our short report on the WFH shortcut method
Although tax time can be an annoying obligation, it is also the perfect time to raise questions about growth and opportunities that might be available for you as an individual, or as a small business. The recent 2020-21 budget has outlined great support for women, individuals and small business for Australians. A chat with an accounting professional will certainly help you head in the right direction and take advantage of new tax laws, offsets and available grants.
At the very least, a conversation about how you operate your business and researching more efficient ways of doing business might yield amazing – and cost saving – results. ITP Accounting Professionals have helped Australian individuals and small business with their tax affairs, bookkeeping and financial advice for 50 years. That’s a lot of experience to be taken advantage of. Phone 1800 367 487 and chat with a friendly professional today.