6 ways to ensure your business is tax ready for EOFY

These are uncertain times. We can see the world changing before our eyes. Yet there is a thing we know for sure won’t change – taxes. So now there are some things business owners need to be thinking about to get ready.

1. Federal government stimulus package

The stimulus package has several relevant features for businesses, so take a good look at whether these apply to you. The measures are designed to support businesses making investments. The government also wants to encourage businesses to bring planned investments forward.

The instant asset write-off threshold has increased from $30,000 to $150,000. This makes it a good time to buy any assets you’ve been meaning to buy such as vehicles, tools, equipment, computers or office furniture.

There is also an investment incentive for businesses which accelerates depreciation deductions. Businesses with a turnover of less than $500 million will be able to deduct an additional 50 per cent of the asset cost in the year of purchase.

There is a cashflow booster payment, of between $2000 and $25,000, for small- and medium-sized businesses. The payments are for 50 per cent of a Business Activity Statements or Instalment Activity Statement.

There is also a wage subsidy for employers of apprentices and trainees. The subsidy is for 50 per cent of an apprentice or trainee’s wage. The subsidy period is from January 1 2020 to September 30 2020.

This situation is changing each day. This might not be the last we hear from the government on the issue of economic stimulation. Keep up to date with the changes to make sure you don’t miss out on an opportunity.

2. Get your records ready

If you are using a system like Xero, pulling your records together shouldn’t be an ordeal. The danger for a lot of small businesses – and I often see this issue with tradespeople – is not planning or keeping records. Often, they’ll get paid and don’t set aside cash for GST. When the GST bill comes around it’s a massive roller coaster of no cash and scrambling until they catch up.

I often advise people to set aside their cash for GST in an offset account attached to a mortgage. It will decrease your interest bill on the mortgage and you can easily pull it out when it’s time to pay the GST.

3. Assemble Fringe Benefit Tax concession documents

The key to smooth claims is good documentation. Assemble vehicle log books, entertainment expenses, travel diaries or evidence of other expenses (company gym memberships, for example). The type of document depends on what you’re claiming, so look into the rules.

4. Check super contributions are up to date

There are penalties for not meeting super obligations. This can be a fine of $10,500 or 12 months in prison, neither of which is a good option. How to arrange super payments varies from business to business. It can be paid monthly but often it’s paid quarterly to keep up the business cashflow.

Regardless of when it’s paid, accounting for it is essential. Having a system, like Xero, makes super obligations easily visible. If the money hasn’t been set aside for super payments it can mean a significant cashflow impact on the business when it’s time to pay.

5. Check for changes, concessions and deductions

The rules about tax concessions and deductions change year to year. The more you know about what you’re eligible for, the better. Check up on rules for deductions for small businesses for things like start-up costs, legal and accounting advice. Or, the rules around whether you need to do a stocktake if you haven’t moved more than $5000 of stock.

Expenses for running a business are well known deductions but are worth checking up on. The basic rules are that the expense must be for the business; if used privately then claim only a portion of the expense; and you need records.

There are also reporting rules that might be relevant to your business. For example, employers with 20 or more employees are required to report through Single Touch Payroll unless granted an exemption. Also, the rules on whether you need to pay GST can change.

6. Get the help and support you need

Making mistakes can become very expensive for small businesses. And the complex and changing tax rules don’t help. The government has many resources for anyone trying to make sense of the system. There are webinars and workshops, live chat and call back services and assistance programs.

The Australian Tax Office website also has several tools for you to plug your information into if you’re curious about eligibility. These tools don’t take the place of a registered tax agent but can help.

Yes, this is a strange time in our history. Yes, there is a lot of uncertainty about what the world, our economies and our borders will look like when the dust has settled. And yes, sure as the sun will rise tomorrow tax time will come around. The situation may be fluid and what you had planned for your business may change. But the fact that you need to have your documents organised and ready to file is one clear certainty.

This article was originally published in Inside Small Business