EOFY 2020


26th June, 2020

10 tax time tips for small business clients this year

MYOB recently hosted a webinar for business advisors of SMEs, featuring guidance from ICB and the ATO on how they can best prepare for EOFY.

This year has been an incredibly disruptive one for businesses at all levels and regions in the country. One thing they’ve relied upon above all else is the sound, practical advice offered by the likes of the bookkeepers and accountants that make up MYOB’s Partners.

With an eye to further assist partners, along with other business advisors as well as all their small business clients, MYOB has brought together key experts in two, 30-minute presentations to cover all the major areas to be aware of at tax time this year.

This second, half-hour webinar was hosted MYOB’s General Manager of Sales and Marketing, Blake Collins and with panellists included the ATO’s Assistant Commissioner of Small Business – Client Experience, Andrew Watson, and Chartered Accountants Australia and the Institute of Certified Bookkeepers’ Amanda Linton.

Due to the wide-ranging nature of the presentation, we’ve pulled out 10 of the most important points to highlight in the current climate, while you can navigate to the link at the bottom of this article to view the webinar in full.

EOFY 2020: 10 tips for small businesses

1. Transition to and prepare for new reporting measures

Single touch payroll means businesses don’t need to lodge payment summaries, but it’s important to ensure employees are made aware of the changes.

“If you’re going through Single Touch Payroll end of the year for the first time, it’s worth making sure you tell your employees they’re not going to get a payment summary this year,” said Watson.

It’s also good to keep in mind that juggling multiple methods of reporting at tax time is unnecessary.

“Once you’re in Single Touch Payroll, you don’t then need to worry about the old system, regardless of whether you came in partway through the year.”

2. Prepare as early as possible

Although some businesses might be accustomed to doing taxes last minute, Andrew advises SMEs to take the time to prepare early to prevent anything from going wrong.

“In the current environment, we’re expecting it to be even busier and the more pre-fill information that’s available earlier, the easier it is for people to get it right.

“We encourage employers to try and do that year-end finalisation as quickly as they can while still taking time to make sure they get it right.”

Often, one of the reasons why businesses are delayed is because they’re confused about when to transition to Single Touch Payroll.

“You can come across at any part of the financial year with Single Touch Payroll. You don’t need to wait until the start of a financial year.”

3. Look to your tax agent for advice

It’s a good idea to remember that some of the best financial advice you can get is just a phone call away.

“Over 90 percent of small businesses use a tax agent to lodge their tax return,” said Watson..

“For those small businesses that haven’t sought the advice from a bookkeeper or a tax practitioner, now is the time to do that. It’ll give you some time back in your business to focus on your business and they’ll give you the sage advice in terms of what you can do next.”
Linton agreed that seeking out advice from established networks was invaluable.

“A lot of businesses actually have trusted relationships in place with advisors already, and now is probably more important than ever to really make sure that you’re engaging and leveraging off the knowledge and the skills base of those advisors in play.”

4. Remember to report JobKeeper as income

JobKeeper is income for your employees, and it needs to be reported as such come tax time.

“If you’ve been receiving JobKeeper payments – that’s $1,500 for each eligible employee for each fortnight you’ve paid them for that – that money is income,” said Watson.

“So that becomes part of your assessable income on your tax return.”
Employer cashflow boost credits are an exception, though.

“They don’t come part of your assessable income, but this is more one where you need to make sure that your tax agent or bookkeeper are on top of it.”

They’re what we call non-exempt income, so you might need to add them in for some income tests, even though you don’t pay tax on it.”

5. Once you’re eligible for JobKeeper, you stay eligible

A consistent point of confusion for small businesses lies in the reporting for JobKeeper. Specifically, businesses are worried that payments will be terminated if their turnover exceeds a certain amount.

Watson said business owners shouldn’t be concerned about this, though.

“Once you’re in, you’re in for the life of the program.”

“When you come back for JobKeeper and complete a declaration form, which asks you how many employees have you paid the $1,500 a fortnight during previous months, it also asks you for some turnover, projected and what your current turnover is.

“That is for statistical purposes. It’s not a re-testing of your eligibility.”

6. Don’t sweat small errors

There’s a lot of financial confusion for businesses at the moment, so errors are bound to happen.

Although you might be wary of the ATO harshly following up, genuine mistakes are expected.

“Generally, for most small businesses in the current situation, if you are trying to do the right thing and you might make a simple error, that is not going to be the ATO coming down on you in this current environment. There’s bigger things that we are focused on,” said Watson..

“The simplest way for businesses to be compliant in the current environment is just try to do the right thing.”

It’s important not to assume that you’ll get a free pass, though – should any issues arise in the future, it’s best to make sure your decisions are backed up

Thankfully, there’s an easy way to do this…

7. Ensure accurate record keeping

The best way to avoid these issues is to ensure the information you record is always accurate.

“What we suggest to people is when you make those decisions, which is just good business practice, is to actually document the reasons around why you made that,” said Watson.

One of the key ways to stay compliant is to make sure the data you’re working with is accurate and organised, and that often starts with your accounting software.

“Making sure that you have a good bookkeeping system in place, that you’re getting the advice on how to get it set up and how to work it properly, that’s certainly something that we would be looking at.”

8. Take advantage of simplified deductions

Working from home has become the norm over the past few months, and this will be addressed through the simplified “Temporary Shortcut Method” come tax time.

This will be represented by an all-encompassing deduction to cover all of the working-from-home expenses from 1 March through to 30 June, 80 cents per hour

This approach won’t be suitable for all businesses, and it is still possible to claim as you normally would for items such as dedicated home office equipment and depreciating furniture.

9. Support is available if you need it

Businesses experiencing stressful debt-related circumstances might feel alone, but Andrew believes that their financial support networks are likely bigger than they know.

“We’ve got flexibility, if you’re in a debt situation, around payment arrangements, potentially deferring some of your lodgement obligations.

“The real key message is to give us a call so we can understand your circumstances, look at where you’re at and help you work through that.

“But again, if you’re in that 90-plus percent that’s got a tax agent, and the large proportion as well that have a bookkeeper BAS agent, use your advisor. They can have the chat with us on your behalf.”

10. Ask yourself challenging questions

Tax time is often the only time business contact an advisor, making it a valuable opportunity to ask some interesting questions and learn about how their business has performed over the last 12 months.

“While the compliance ticking of the boxes is not necessarily going to change for this end of financial year, what will change is the conversations we have,” said Linton.

We should be looking at things like: does the business need to continue operating in the way in which we’ve been doing it, or are there more efficient ways that we can achieve the same outcome?”

Want to access the full presentation? You can download it here.