This information is intended as general guidance only. For specific guidance please refer to the ATO website or consult your Tailored Accounts accountants.
Uncertainty about the continuing spread of the noble coronavirus makes people fear for their health and their lives. If you are doing business in one of the industries, which are most susceptible to health and economic problems, such as tourism, food services, retail, or healthcare, the pandemic has struck your disproportionately hard. Under high uncertainty, funding and immediate government grants have been made available for eligible businesses to navigate the road to recovery. This End-Of-Financial Year Tax Tips will help you reach out and effectively leverage a range of existing support measures for business survival and growth.
Covid-19 Stimulus Measures
The government released a number of economic measures in response to COVID-19. Some of them may impact your FY 2020 tax return.
- Enhancing the instant asset write-off
The cost threshold for which entities can access an immediate deduction for depreciating assets and certain related expenditure has been increased from $30,000 to $150,000 for the period 12 March 2020 to 31 December 2020. The turnover threshold of businesses eligible for the instant asset write-off during this period has also been increased to include businesses with an annual turnover of less than $500 million (up from the existing cap of $50 million).
- Backing business investment
Entities with an aggregated turnover of less than $500 million in an income year who do not use the simplified depreciation rules for small business may be eligible for accelerated depreciation if the entity starts to hold the asset and the asset was first used or installed ready for use for taxable purposes between 12 March 2020 and 30 June 2021.
The tax implication on received stimulus payments:
- The Cashflow boost you have received will be treated as non-assessable, non-exempt income and is therefore not taxable to the entity. However, JobKeeper payments received are assessable income of the entity. Deductions for payments to employees are available provided the general requirements for deductibility are satisfied.
Other tax-saving tips
- Super Contribution
All contributions which are required to be received by the superfunds by 30 June 2020 need to be scheduled for payment within ClickSuper by 4 PM AEST on Monday, 24 June 2020. Superannuation contributions paid after this date may or may not be received by the superannuation fund by 30 June 2020.
- Review your Debtors
Review your aged receivables and write off any recoverable debts before 30 June 2020. The bad debt written off can be claimed as a tax deduction for the 2020 financial year.
- Pre-pay your expenses
Small business entities may be able to prepay expenses and claim an immediate deduction in the financial year in which they are paid.
- Trust resolution
Document and sign the trust distribution resolutions before 30 June 2020.
If your business was not eligible for the JobKeeper grant during the March-May period, it is recommended to re-assess your JobKeeper eligibility for the period of June-August.
Tailored Accounts is committed to supporting businesses during this critical time. Please contact us for JobKeeper, EOFY, Tax and Advice supports. Our expertise and experience will put your business in the best possible position for sustainable success.