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Most business owners would be excused for feeling like they’re in a time warp this year. Just as the year began, along came COVID-19 that’s made it feel fast and slow all at the same time. 

Now, here we are again already, heading into tax time in the current environment we’ve put together this set of tips to help you get ready.

Prepare a financial forecast out until 30 June 2020 to assist in estimating the tax liability due when lodging your 2020 return. Make sure the following factors are taken into consideration when preparing this:

1. Expected JobKeeper payments, note these amounts are taxable;
2. Expected PAYGW employer cashflow boost payments, note these amounts are non-taxable non-exempt payments;
3. Payroll tax concessions that have been provided by the various states of Australia;
4. Variations to income and expenses caused by the COVID-19 restrictions; and
5. Undertake a thorough review of debtors, and if any of these have been severely affected by the COVID-19 restrictions, consider whether these debts should be written off.

On completion of this forecast, if you have found your estimated tax liability is less than the PAYG instalments already paid, there is an ability to get the amounts overpaid when lodging your June BAS rather than needing to wait until the lodgement of your business tax return.

In the current environment minimising cash outflows is a priority for most businesses; however, if the business is in the fortunate position of having sufficient working capital, then the following items should also be considered:

1. If you are a Small Business Entity (SBE), you should make prepayments for the next financial year before 30 June 2020 to claim the deduction in this financial year.
2. Pay staff superannuation for the June quarter by 30 June 2020.
3. The higher Instant Asset Write-Off (IAWO) threshold provides cash flow benefits for businesses that will be able to immediately deduct purchases of eligible assets each costing less than $150,000. The threshold applies on a per asset basis, so eligible businesses can immediately write‑off multiple assets and can be claimed by companies with a turnover up to $500M. The IAWO is due to revert to $1,000 for small businesses (turnover less than $10 million) from 1 July 2020.
4. Backing Business Investment (BBI) – A time limited 15 month investment incentive that allows businesses with turnover of less $500M to claim 50% of the cost on installation of assets acquired from 12 March 2020 and first used or installed by 30 June 2021. The existing depreciation rules then apply to the balance of the asset. You may be able to apply this to the software build you’re currently undertaking if the cost is over $150k and, therefore, unable to apply the IAWO.

As former Australian Prime Minister, Malcolm Fraser once said: “Life wasn’t meant to be easy”. It’s a statement that’s certainly true of the administration of business finances and tax at this time of year. However, for well-organised and well-run businesses that have the support of a good accountant, the impact becomes negligible. 

The best accountants operate beyond just the administration of compliance obligations. They will help to make your business commercially stronger and will challenge you to make your business all that it can be.

If you’d like to learn more, please contact us at WLM Financial.

For more information on WLM Financial's accounting services, click here.