As we welcome the 2023-24 financial year, it’s time to start looking at your 2022-23 tax return. The ATO wants to make it as easy as possible for your franchise to get your tax and super right. Here are some tips to get your tax right and set yourself up for the year ahead.
You can claim a deduction for most expenses you incur carrying on your franchise, as long as they are directly related to earning your assessable income.
Remember the three golden rules so you only claim what you’re entitled to:
1. The expense must have been for your business not for private use.
2. If the expense is for a mix of business and private use, you can only claim the portion that is used for your business.
3. You must have records to prove it.
For more information on deductions, go to ato.gov.au/businessdeductions
Review your pay as you go (PAYG) instalments
If you think your PAYG instalments could result in you paying too little or too much tax for the year, you can vary your instalments. You can make your variation when you lodge your business activity statement or instalment notice, through Online services for business or your registered tax or BAS agent.
Remember, you must lodge your variation on or before the day your PAYG instalment is due, and before you lodge your tax return for the year.
For more information, visit ato.gov.au/paygi
Finalise your end of year STP
If your franchise has paid employees during the 2022-23 financial year, you need to finalise your Single Touch Payroll (STP) data by 14 July.
As well as checking that your employees’ year-to-date amounts are correct you should also make sure:
- you finalise all employees you’ve paid this financial year, including casuals you haven’t paid for a while and terminated employees,
- you’re finalising the correct financial year. Sometimes, employers accidentally finalise for the wrong financial year (this usually happens in the first few days of July). So, just be certain you’re finalising for 2022/23.
You may have a later due date to finalise for any closely held payees you have. A closely held payee is someone who’s directly related to the entity paying them, for example:
- family members of a family business,
- directors or shareholders of a business, or
- beneficiaries of a trust.
Most employers like you, will be finalising in STP Phase 2 for the first time this year. While the rules around finalisation haven’t changed, it’s a good idea to make sure you’re familiar with common STP Phase 2 reporting questions and mistakes. Knowing what (and what not) to do will help you report accurately.
You can find out more at, ato.gov.au/stp2
Keep things super with your employees
As a good boss, you’ll need to pay the super guarantee (SG) for each of your eligible employees, including any contractors hired mainly for labour. Make sure the correct amounts of super are paid on time to the right funds. When we say, “on time”, we mean the date that the amount is received in your employee’s fund and not the date that you pay.
Pay and report your SG at least four times a year by the 28th of January, April, July and October. You’ll notice that July date is coming up fast so be prepared! Pay and report electronically so it meets SuperStream requirements.
If you do miss the due date, even by a day, lodge a super guarantee charge (SGC) statement and pay the SGC to the ATO. You’ll avoid penalties of up to 200% of the SGC by lodging on time.
On 1 July, the SG rate increased to 11% of your employee’s ordinary time earnings (OTE), but if you missed the due date and have to pay the SGC:
- it’s calculated using your employee’s salary and wages not OTE,
- it costs more than the super you would have paid, and
- you won’t be able to claim it as a tax deduction.
You should also note that the SG is progressively increasing to 12% in 2025.
For more information, go to ato.gov.au/sgc
Stay on top of your FBT obligations
If you provide benefits to staff other than salary or wages, fringe benefits tax (FBT) may apply. The FBT year runs from 1 April to 31 March, so its timing is a little different to the standard financial year.
To make sure you get your FBT right, follow four simple steps:
1. Identify the types of fringe benefits provided. For example, cars and car parking, loan and debt waivers, accommodation and entertainment related benefits.
2. Determine the taxable value. Make sure you use approved valuation methods to work out if you have an FBT liability. There are different valuation methods and exemptions or concessions depending on type of fringe benefit.
3. Lodge an FBT return. If you have an FBT liability, you’ll need to lodge your return and pay any FBT you owe by the due date, unless your tax agent lodges electronically for you. If the value of reportable fringe benefits for any employee is more than $2,000 you’ll need to include the grossed up value through single touch payroll (STP) or on that employee’s employment summary. Any contributions your employees make toward the cost of a fringe benefit must be included on your tax return as assessable income.
4. Keep records to demonstrate your calculations and support your FBT position.
For more information on FBT, go to ato.gov.au/fbt
See if you need to register for GST
If your business sales (gross income minus GST) are $75,000 or more in a 12-month period, or you are a taxi / ride-sourcing driver regardless of your turnover, you’ll need to register for GST within 21 days. You only need to register for GST once, even if you run multiple businesses.
It’s a good idea to check each month to see if you’re reaching the threshold or likely to exceed it, so you’re prepared when it comes to your GST obligations.
Once registered, you need to include 10% GST in the price of your goods and services sold in Australia – unless they’re GST-free or input taxed.
You will also need to lodge business activity statements (BAS). This will allow you to:
- report your sales and purchases and pay GST collected to the ATO
- claim credits for the GST included in the price of goods and services you buy for your business.
For more information about GST and how to register, go to ato.gov.au/gst
Record keeping and digital services
A good record keeping system will 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 so you can make improvements in the future and make next tax time even easier.
The right digital tools can also help you perform daily business activities easily and securely, making it easier to work with us when it’s convenient. Make sure you’ve set up myGovID and Relationship Authorisation Manager (RAM) to access our online services, including Online services for business which allows you to manage your business reporting and transactions in one place.
To find out more, go to ato.gov.au/onlineservices
Changes to your tax return this year
This year you may receive a lower tax refund than in previous years, or a tax bill. There are a number of reasons for this, including:
- the low and middle income tax offset has ended
- your credit or refund has been offset against another debt, including a debt on hold
- a change in your personal circumstances.
You can find out more at atogov.au/mytaxresult
Ask for help if you need it
It’s important to keep your lodgments up to date – even if you can’t pay immediately. Lodging on time will help you understand your net tax position, which means the ATO will be able to figure out the right tailored solution for you.
If you have a tax debt and can’t pay in full, in most cases, you’ll be able to set up your own payment plan online. The ATO’s self-serve payment plan option is available for debts up to $100,000.
If you need extra support or assistance, contact the ATO early to discuss your options. They will work with you or your registered tax or BAS agent to help you get back on track, and to manage your obligations.
You can find out more at ato.gov.au/cantlodgeorpay