SUPPORTING BUSINESS THIS TAX TIME
It’s tax time again and the ATO is here to help your business with its tax and super obligations. We’ve got a range of support initiatives available to help you, as well as handy tips for your business tax return, so that you can get on with the job of doing business.
Getting your tax return right
We want to make it as easy as possible for you to get your business’s tax and super right. Three common mistakes businesses often make in their tax returns are:
- forgetting to declare all business income
- not accounting for private use when it comes to business money or assets
- not keeping accurate and complete records.
To help you avoid these mistakes and make things easier for you down the track, this year remember to:
- declare all your business income, including cash and online sales, dividends, interest, capital gains or one-off transactions such as selling equipment. If your business has received JobKeeper payments or JobMaker hiring credits, these are also assessable income and need to be correctly recorded in your 2020-21 tax return
- accurately record the value of any goods taken for private use, directors’ fees or money drawn out of your business
- correctly apportion expenses that are both private and business use
- only claim expenses that you are entitled to claim
- understand what records you need to keep and how long you need to keep them for.
Visit ato.gov.au/SBsupport, our one-stop shop for tools and services, to help make it easier for you to get your tax return right and claim the deductions you’re entitled to. You may also want to take a look at the ATO’s small business tax time toolkit that has a directory of links to useful information and fact sheets to help you at ato.gov.au/SBtaxtimetoolkit
Good record keeping also makes good business sense
It’s important that you understand what records you need to keep, and that they are complete and accurate. You need to keep most records for five years, store them in a safe place, and they must be in English (or easily converted to English). Find out more at ato.gov.au/recordkeeping
A good record-keeping system will also help you manage your tax and super obligations. This will make it easier to report and lodge on time with us. You can use our record-keeping evaluation tool at ato.gov.au/recordkeepingevaluation to help you check how well you’re keeping your business records and make improvements if you need to.
Made a mistake after lodging your business tax return?
If you've lodged your tax return but realise you've made a mistake, it’s important to fix it. For example, you may have:
- made an error when answering a question
- forgotten to include some income
- forgotten to claim a deduction you were entitled to.
You can make or request an amendment through:
- your registered tax agent
- myGov, if you're a sole trader
- Online services for business
- Standard Business Reporting (SBR)-enabled software.
Visit ato.gov.au/amendareturn or talk to your tax practitioner to find out more.
Online services for business
The ATO has collaborated with businesses to develop a new digital service that makes it easier for you to interact with us online. Online services for business has business friendly features, including easy BAS lodgement, a single log-in and switch ABN feature to manage multiple businesses in a single session, intuitive navigation, the ability to make a payment plan and secure-mail interaction with the ATO. Our old Business Portal retires at the end of July, so now is the time to join many other small businesses and switch to Online services for business. To find out more visit ato.gov.au/OSB
Help with managing your cashflow
We know that effective cash flow management is a major issue for small businesses. Talk to your tax professional or business advisor today about using the Cash Flow Coaching Kit to get your cash flow management back on track. It’s a simple program that navigates and strategises cash flow for your business, helping you to plan ahead and grow, even in times of stress and pressure. The Cash Flow Coaching Kit is a resource for you and your advisor to use together. To find out more visit ato.gov.au/cashflowcoachingkit
Tax incentives for business
The Australian Government has implemented several new measures and tax incentives to help businesses kickstart their economic recovery. Temporary full expensing and loss carry back are two of these measures.
Eligible businesses can access these measures if they have an aggregated turnover of less than $5 billion.
Loss carry back provides a refundable tax offset that eligible corporate entities can claim in their 2020–21 and 2021–22 company tax returns. You get the offset by choosing to carry back losses to earlier years in which there were income tax liabilities. By doing so you may receive a refund, a reduced tax liability or a reduction in debt owing to the ATO.
Temporary full expensing allows you to immediately deduct the business portion of the cost of eligible new depreciating assets. For businesses with an aggregated turnover of less than $50 million, it also applies to the business portion of eligible second hand depreciating assets.
For more information about the range of depreciation incentives available for businesses, visit ato.gov.au/bounceback
JobMaker Hiring Credit
The JobMaker Hiring Credit Scheme is an incentive for businesses to employ additional eligible job seekers aged 16 to 35 years between 7 October 2020 and 6 October 2021. Employers can receive up to $200 per week for each new job they fill with an eligible employee aged 16 to 29 years, and up to $100 per week for each eligible employee aged 30 to 35 years old. To find out more about the JobMaker Hiring Credit Scheme visit ato.gov.au/jobmakerhiringcredit
Get ready for Single Touch Payroll Phase 2 from 1 January 2022
The data collected through Single Touch Payroll (STP) will be expanded to include additional information. This expansion (also known as STP Phase 2) reduces the reporting burden for employers who need to report information about their employees to multiple government agencies. It also supports the administration of the social security system. You will be required to provide additional STP information to us from 1 January 2022. There is nothing you need to do right now. We are working closely with software providers who will update their STP-enabled software. What you need to do to set up will depend on what product you use and how you manage your payroll. Our website has detailed information to help you get ready for the changes. See www.ato.gov.au/stp2.
If you need more help
If you have a business tax or super obligations problem it’s never too late to ask for help. Whether it’s COVID-19, natural disasters, personal issues or financial difficulties, we're committed to understanding your situation and helping you get it right.
It's important to lodge your tax return on time, even if you can't pay. This will show us you’re aware of your obligations and doing your best to meet them.
If you're worried you won't be able to pay on time, we may be able to set up an affordable payment plan that works for you. We encourage you to contact us as early as possible or speak with a registered tax practitioner who can contact us on your behalf.
For more information visit ato.gov.au/supporttolodgeandpay
Find out more:
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.