Be Tax Ready for 2020* – 3 Top Tips
If there’s one thing that can be hard for small and medium businesses to avoid at the end of the financial year it’s a tax related surprise. Or two. We know you have enough on your plate without worrying about crossing every ‘t’ and dotting every ‘i’ when it comes to tax. That’s why, with the start of a new financial year, we’re sharing tax tips for the year ahead. So that when June 2020 rolls around you’ll feel more EOFY ready.
As an SME owner the earlier you can be thinking about your 2020 tax affairs the better – here are three big things to be thinking about right now:
Expenses claimed by SMEs are on the ATOs radar – and it seems the ATO is increasingly equipped with data to detect businesses who are claiming deductions that are beyond the norm. So, when it comes to expenses it really does pay to keep track of everything you may claim come tax time.
And, in today’s digital age, there’s really no excuse for putting diligent expense tracking in the too hard basket. There are many options available when it comes to software and apps that help businesses track their expenses. Here are two that could make 2020 the year you make light work of expense tracking.
- Expensify app has features that include smart technology that eliminates manual data entry making in easy to keep track of receipts. Plus, it gives you accounting integration with software including Xero.
- Zoho Expense features of this clever software include pinning receipts to reports and sorting expenses by category. Even better a built in GPS tracker means this app can log mileage overheads – perfect if your day-to-day is heavy on the travel.
2.The instant asset write-off^
Does your business need new technology or equipment? Good news – the instant asset write-off tax concession has been increased to $30,000 and extended to 30 June 2020. And, from April 2019 the scheme has also been extended to businesses with turnover of $10-50million.
So, if you have a ‘need now’ (or even a wish list) investment in mind that could improve your sales pitch, installation speed or customer service then don’t wait until the end of this financial year to take advantage of this tax benefit. Because chances are that if you wait until May or June you could make a hasty decision. Instead start thinking now about what you can best invest in and move forwards without too much delay – that way your business can benefit from the purchase throughout the year too.
- Assets don’t have to be new – second hand assets also may qualify for the write-off
- You can claim for multiple assets provided each is under the threshold
- Assets over $30,000 can still be claimed as a tax deduction over the life of the asset
For more information visit the ATO's small business newsroom
3. Single Touch Payroll
Single Touch Payroll, or STP, is now real for small and medium businesses. From 1 July 2019 it applies to all employers with 19 or less employees. What does this mean in practice? SMEs will now report tax and superannuation information for employees to the ATO each time they pay wages or salaries, typically this will happen directly through payroll software.
If you’re not yet STP ready don’t panic – there’s a gradual three-month transition period in place – which allows businesses to start reporting between 1 July and 30 September 2019. If you’re not yet STP ready talk to your accountant, software provider or a tax adviser.
- What to do if you don’t use payroll software
- Requesting more time to move to STP
- No and low-cost solutions for businesses with 1-4 employees
And for a list of available STP solutions visit the STP product register
If you need more guidance on tax don’t wait until 2020 – contact a registered tax agent or BAS agent for support.
*The information provided is general in nature only and does not constitute personal or commercial financial or taxation advice. You should consult your own financial advisor regarding these matters.
^ For more information on the small business tax incentive visit the ATO website https://www.ato.gov.au/Newsroom/smallbusiness/General/$30,000-instant-asset-write-off