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When you run a small business, you cannot afford not to know the numbers that effect its growth. We pride ourselves on delivering our business clients the financial facts along with the strategies to maximise performance – whether you’re a business of 1 or 1000.
As the end of another tax year rapidly approaches on 30 June, we’ve put together an End of Financial Year FAQs to help you maximise tax time benefits.
Yes, the new shortcut method can be used for all individuals working from home. Even those who worked from home prior to the COVID-19 pandemic. Be aware that the shortcut method applies to those hours worked between 1 March and 30 June 2020. Taxpayers can also choose to continue to claim using existing methods which are outlined below.
-the work
-related portion of your actual expenses
-the fixed rate of 52 cents per hour plus the work
-related portion of expenses not covered by that rate.
To find out which is the most appropriate method for your circumstances, book an appointment with an RJS Professional here to discuss the most appropriate method for your circumstances.
Taxpayers will need to retain receipts for expenses, in addition to the records showing all work-related use. This method will have individuals calculate the size of their home in addition to the size of the work-related space. Remembering to also include the total of household running expenses (electricity & gas).
To apply this method, taxpayers will need to calculate the business percentage by dividing the area of work-related space by the total house area, then multiply this rate against the total costs. This is the amount that may be claimed. Click here to view the ATO’s working from home calculator. Or book an appointment with an RJS Professional here to discuss the most appropriate method for your circumstances.
If you and all of your dependents were not covered by an appropriate level of private patient hospital cover, and your income for MLS thresholds is either met or above, you may still be required to pay the surcharge. The rate depends on your income for the surcharge threshold. This applies unless you (and your dependents if you have them) are exempt from paying the Medicare levy. Click here to find out more about the Medicare Levy Surcharge exemption.
If you hold hospital cover but temporarily suspend payments for that cover, then you may have to pay the surcharge for the days that the private health cover was not in force. This will be determined from the information the health provider and the taxpayer provide to the ATO.
No, if you have lost your job, then you are entitled to claim the tax free threshold to reduce the amount of tax that is withheld from your pay from the new job.
Remember to tell the new employer that you want to claim the tax-free threshold by answering ‘Yes’ at question 8 ‘Do you want to claim the tax-free threshold from this payer?’
You can see how much tax the employer will withhold from your payment by using the tax withheld calculator. Click here to view it.
You may need to lodge an Australian tax return if you earn any assessable income from an Australian source. Your Australian tax obligations generally remain unchanged as a taxpayers salary, wages, investment income, etc will still be assessed.
All foreign-sourced income will also be assessable unless you are a temporary Australian resident.
Tax matters can be complicated. It’s best to seek advice from an RJS Professional on 1300 27 28 29.
Whether you are a resident for tax purposes in Australia is dependent on your individual circumstances. If an individual is here temporarily for some weeks or months because of COVID-19, then the individual will not be considered an Australian resident for tax purposes if the following is in force:
It is important to consider that circumstances may complicate the matter if the individual:
Please seek advice on 1300 27 28 29 to understand the possibilities as the consideration as potential tax outcomes.
Those who usually work overseas and earn foreign-source employment income may need to declare it in Australia. For those who have been on leave since arriving in Australia and are receiving foreign income from paid leave (such as annual or holiday leave) may be considered foreign-sourced income.
Check with an RJS Professional on 1300 27 28 29 to find out what is most appropriate for your circumstances.
Employment income derived by a person who is a resident of another country (after applying the double tax arrangements (DTA) tie-breaker rules) and is performing duties in Australia for a short period, will not be taxed in Australia. DTA’s must be confirmed before assuming this is the case as the wording, conditions and time periods vary from agreement to agreement.
Generally, employment income will not be taxed in Australia if:
Check with an RJS Professional on 1300 27 28 29 to find out more
If you usually live and work in Australia but you are temporarily overseas as a result of COVID-19, there is no change to your Australian tax obligations.
It depends. Some eligible temporary residents can apply to access up to $10,000 of their super until 30 June 2020. Otherwise, if you have worked and earned super while visiting Australia on a temporary visa, visitors may like to consider applying for this super to be paid on departure as an Australia superannuation payment (DASP) after you leave.
Yes. If interest continues to accumulate on your loan, it remains deductible. Even if the bank defers the repayments.
Before adding to super, keep in mind that the money will be inaccessible until certain conditions are met. There are caps on how much can be contributed to super each year.
Before adding to super, keep in mind that the money will be inaccessible until certain conditions are met. There are caps on how much can be contributed to super each year.
It’s important to take the caps into account as penalties may apply if exceeded. Make sure any contributions are received before June 30 to claim a deduction or offset for that financial year. With electronic transfers (including BPAY) the contribution takes effect the day the super fund receives the money, not the day of transfer. So don’t leave it to the last minute, talk to an RJS Professional today about maximizing your superannuation contribution caps, because with planning… retirement is just the beginning.
With the end of the financial year approaching, it’s a great time to make smart decisions about your finances. Taking action before 30 June can open up more opportunities for you.
We know that there isn’t a one-size-fits-all solution to accounting, wealth management and business growth. So we’ve outlined some tax-effective strategies that you may benefit from.
We can help you find what strategies are right for you and/or your business
No, the deduction will apply if the business does not meet its PAYG withholding obligations. However, a deduction will apply to salary, wages, commissions and bonuses paid to employees. It will also apply to payments for the supply of services where a contractor has not provided their ABN.
Yes, the premium paid for audit insurance is tax-deductible. It also covers the cost of defence in the event of a claim. The ATO continues to benchmark businesses, with cash businesses become a major focus. Technology is becoming more advanced so be aware of information sharing and matching between government and non-government institutions.
The instant asset write-off caps at $30,000. However, due to COVID-19, from 12 March to 30 June the instant asset write-off was increased to $150,000 excluding GST.
The depreciation limit for the 19/20 FY is $57,581 – it applies to both the depreciation as well as the GST credits claimable.
The ATO continue to focus on the use of work vehicles for private use. Business owners may consider limiting the length per trip and total km per annum.
Yes, if the businesses accountant is using the income on a cash basis method. Delaying receipt until after 30 June, will delay the tax liability by a full tax year. If however, the business uses the accrual method, it is important to hold back issuing of invoices for the deferral to apply.
Yes, if the businesses accountant is using the income on a cash basis method. Delaying receipt until after 30 June, will delay the tax liability by a full tax year. If however, the business uses the accrual method, it is important to hold back issuing of invoices for the deferral to apply.
If cash flow allows, creditors’ accounts should be paid by 30 June to maximize deductions. The 12-month rule will apply to prepayments for expenses such as registrations, insurance and subscriptions. Accounts under $1,000 are excluded from the 12-month rule.
Depending on your circumstances, consider restructuring to a corporate entity to take advantage of the flat company tax rate. Companies with a turnover of $50 mil or less will be taxed at 27.5% in 2019 FY (this is expected to drop to 26% from 1 July 2020).
If a re-structure to a corporate entity is not feasible, consider making a distribution to a company to maximize tax at 30%
Consider paying dividends to shareholders before the end of the financial year to utilise the higher rate of imputation credits, which will lower post 30 June.
The Australian Government has released a number of relief packages to help business owners through the impact of the COVID-19 pandemic, click here to take a look and speak with an RJS Professional on 1300 27 28 29. Running a business is a never-ending business. We can help.
For more information on our services, CLICK HERE.
We’ve put together some resources to assist you:
