ATO: WAYS TO STAY ON TOP OF YOUR CASHFLOW
As the world economy recovers from the impact of COVID-19 many business owners’ attention is turning to working out an action plan for their business.
However, when faced with the pressure of trying to save a business that is facing financial difficulties, business owners can run the risk of making poor decisions.
It’s important not only to get the basics right but also to spend your time wisely and concentrate on areas that will help your business succeed.
Cash flow is the lifeblood of any business. Like fuel for your car, without cash flowing through your business, it won’t run. Getting your cash flow in order and understanding the current health of your business will help you and your business to prepare for the ‘new normal’.
At the ATO, we offer a range of tools and services to help you manage and grow your business and get back on track if you need it.
Take advantage of Government grants and tax concessions
From 6 October 2020 as part of the 2020-21 Budget, the Government implemented several measures and tax incentives to help businesses kickstart their planning and activate their recovery. This includes temporary full expensing, loss carry back, the increase of the small business entity threshold, and the JobMaker Hiring Credit Scheme among others.
- Temporary full expensing: This measure is intended to interact with the loss carry back measure. Businesses may make a loss in an income year as a result of claiming an immediate deduction under temporary full expensing. If the business makes a tax loss, they can consider if they are eligible for a loss carry back refundable tax offset. Information on temporary full expensing can be found at ato.gov.au/temporaryfullexpensing
- Loss carry back: To make a loss carry back claim, a business must meet certain requirements, including;
- Making tax losses in the 2019-20, 2020-21, or 2021-22 income years
- Having an income tax liability in the 2018-19, 2019-20 or 2020-21-income years
- Having a surplus in your franking account at the end of the income years that you are claiming the tax offset
- Meeting your income tax return lodgement obligations
Eligible entities can then choose to carry back these tax losses and claim the refundable tax offset which will increase their cash flow. If you decide not to carry back your tax losses, you may be able to carry your business tax losses forward to use in a later income year. Information on loss carry back can be found at ato.gov.au/losscarryback
- Increasing the small business entity turnover threshold: This measure extends certain small business concessions to businesses that have an aggregate turnover of less than $50 million per annum. The tax concessions will apply from 1 July 2020 or 1 July 2021, and the Fringe Benefit Tax (FBT) related exemptions will apply for eligible businesses in respect of benefits provided on or after 1 April 2021.
- The JobMaker Hiring Credit Scheme is giving businesses and young people impacted by COVID-19 a helping hand. It’s an incentive for businesses to employ eligible job seekers aged 16 to 35 years old from 7 October 2020 to 6 October 2021. Employers can receive up to $10,400 per year for each new job they fill with an eligible employee aged 26 to 29 years, and $5200 for each eligible employee aged 30 to 35 years old. Find out about more at JobMaker Hiring Credit scheme
Manage your debts
If you are worried you won’t be able to pay on time, or you’ve already missed a due date, contact us as early as possible to discuss your situation. We have a range of options to support you. If you are trying to do the right thing, we’re committed to understanding your situation and helping you where possible.
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Education is key
Good business relies on good planning so it’s fundamental to spend your time wisely and concentrate on areas that will help your business to succeed. The ATO is offering webinars to help you prioritise and focus on strategies to maximise your cash flow.
- Connecting online with the ATO: Sole traders: This session is for sole traders who want to know how to manage their tax and super online. You will also learn the ins and outs of GST, pay as you go withholding, pay as you go instalments, how to lodge your tax returns and more.
- Connecting online with the ATO: Businesses: This session has been developed for companies, partnerships and trusts. You will learn how to register, lodge and pay online for GST, pay as you go withholding, pay as you go instalments and more using Online services for business which is replacing the Business Portal.
- Strategies for improving your cash flow: Cash flow management is critical to the success of any business, but it’s not always easy to find ways to improve your cash flow. This session explores seven key strategies that may improve the cash flow of your business.
We also recommend you sign up for our webinar ‘Cash flow for small business success’ which demonstrates free online tools you can use for cash flow management.
To register for a webinar, visit www.ato.gov.au/sbwebinars
Tools to help you
Use our range of calculators and tools to help you run your business. These include:
- Record keeping evaluation tool: See how well your business keeps records.
- Employee contractor decision tool: Find out if your worker is an employee or contractor for tax and super purposes.
- Small Business Superannuation Clearing House: Check if you are eligible to use the clearing house to pay all your super contributions in one online transaction.
- Superannuation guarantee charge statement and calculator tool: Work out how much super you need to pay if you have not paid your super contributions on time.
More help, support and services
We have further help, support and services for your small business:
- Small business newsroom – subscribe to our newsroom and get all the latest tax and super news, delivered straight into your email inbox.
- Live chat – use this service to ask about GST, ABN, myGovID, BAS, account enquiries and to update details. Live chat is available from 3.00pm–8.00pm (AEDT) Monday to Friday and 10.00am–2.00pm (AEDT) on Saturday (except public holidays).
- Contact us for business enquires such as account balances, business registrations, business tax return preparation and BAS.
Andrew Watson is an Assistant Commissioner for the Australian Taxation Office in the Small Business line. He collaborates with small businesses, industry groups and government agencies to shape the client experience and drive improved digital services. His area also helps small businesses manage cash-flow and digital readiness.