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When it comes to motor vehicles, there is a lot of misinformation about what you can claim. Make sure you give our blog post a read for the truth, the whole truth and nothing but the truth on what you can claim!
Did you know that if a Christmas party for staff is held on your business premises on a working day it is regarded as an exempt property benefit? So what does that mean? NO Fringe Benefits Tax (FBT) but no tax deduction.
What if it’s not at your business premises? Remember the golden rule, if the party is $299 or less for each employee it can be regarded as a minor benefit with NO FBT but no tax deduction. If the party is $300 or more and off premises then you will need to pay FBT but it will become tax deductible.
What about for clients and suppliers? NO FBT but not tax deductible.
Are you considering paying a Christmas Bonus for your staff?
Yes absolutely, they deserve it we hear you say. You may wish to consider what type of bonus it is as each has a different tax outcome.
If it is paid as a bonus, then you will need to include as part of their wages and remit PAYG Withholding and super but it will be tax deductible.
If it is paid as a gift – hamper, gift card anyone – and it’s under $300 per staff member (spontaneous & ad hoc) then it would be considered a minor benefit and you won't have to worry about FBT, but it won’t be tax deductible
The instant asset write off has no cap for assets purchased from 6 October 2020 and installed and ready for use prior to 30 June 2022 for eligible businesses.
This does include motor vehicles but did you know that the car cost limit of $59,136 for the 2021 year is still in place and that you can only claim for the business portion.
Superannuation guarantee contributions (SGC) for employees need to be paid by the employer to super funds by the 28th of the month post the quarter end (Sep, Dec, Mar, Jun).
If it’s not paid on time it becomes non deductible and you need to lodge a superannuation guarantee statement and pay non remittable penalties per employee and interest charges to the ATO.
Software like Xero makes it easy to pay your employees and keep track through their Auto Super function and they recommend to process 14 days before the due date to get it processed on time!
If you don't have the right financial foundations, your sales won't be turned into profit and cash and you will end up running what is considered a 'business charity', where you have losses or employees are receiving a higher rate of return for their work than you are as the business owner.
Your financial foundations should include the following:
- Profit and loss - ensure income can be converted to profit - Balance sheet - ensure assets are greater than liabilities and there is healthy equity
- Cash flow statement - ensure there is more cash coming in than leaving
Under the new JobMaker hiring credit, there are a variety of incentives to motivate businesses to hire younger employees.
For younger employees, employers can claim:
- 16-29 years = $200 per week
- 30-35 years = $100 per week
The employee must have been on either:
- Youth Allowance
- or the Parenting Payment for at least one of the previous 3 months
You must increase the headcount of employees, not replace older employees.
The new employee must work 20 hours a week, and report payroll through Single Touch Payroll [STP]
This incentive is available from the 7th of October 2020 to 6th of October 2021
In 2020, many of us have worked from home for the first time or for longer periods than we have in the past. This means you may have working from home expenses to claim on your latest tax return, and there are a number of different ways you can do this.
- Shortcut method
- Fixed rate method
- Actual cost method
JobKeeper has been extended by the Australian Government but there is new information that you need to be aware of as a business owner.
- From 28 September, businesses will be required to demonstrate decline in turnover using actual GST turnover for both June and September quarters.
- For businesses with turnover under $1 billion, this decline in turnover is required to be at least 30%.
- JobKeeper will remain open to new recipients, provided they meet the eligibility requirements.
If you started reporting through Single Touch Payroll (STP) in 2020, then you need to make a finalisation declaration by 14 July or if you have less than 19 employees you have until 31 July. Head to www.ato.gov.au/STPfinalisation for more information!
You should advise your employees that you will not be providing them with a payment summary for data reported and finalised through STP, and they can access their income statement via MyGov in the ATO online portal, or from their tax agent. They will need to wait until their information is marked as 'tax ready' before lodging their tax return to ensure all information is correct.
As of 12 March 2020 to 31 December 2020 the instant asset tax write off has been raised to $150,000. This means that if you are a business with an aggregated turnover of <$500 million, you can purchase assets up to $150,000 with an immediate deduction which reduces your profit and tax payable.
Absolutely, there is a home office shortcut method available for the period 1 March to 30 June 2020 where you can claim 80 cents per hour for each hour you work from home.
You can choose to use this rate if you:
- are working from home to fulfil your employment duties (not just carrying out minimal tasks such as occasionally checking emails or taking calls)
- have incurred additional running expenses as a result of working from home.
The shortcut method covers all of your work from home expenses, such as:
- phone expenses
- internet expenses
- the decline in value of equipment and furniture
- electricity and gas for heating, cooling and lighting.
If you use this method, you can't claim any other expenses for working from home during that period.