With only one month left for end of Australian tax season, residents and businesses are rushing in to file their tax returns. If not lodged on time, they may end up facing financial penalties. The tax season this year has been one of the busiest ones for all registered tax agents in Australia. Mr. Jatin Savalia, tax accountant at McFillin & Partners Accountants in Brisbane, brings clarity on the deadline for lodging your tax return and how small and medium businesses in Australia can still benefit in the coming months.
Generally, the lodgment dates are the same each year for Individuals. Individual tax returns need to be lodged by 15th May, 2021, provided they are lodged through a registered tax agent.
The lodgment and payment date for small companies is 28th February, 2021. If you have any prior-year returns outstanding, the due date for those returns will be 31st October, 2020. Similar to individual returns, companies also get an extension up to 15th May if returns are done by a registered tax agent. Similar extension to lodge tax return can be accessed by the client for Trusts, Partnerships, and SMSF’s, provided they are on the client list of a registered tax agent.
If there are any outstanding prior year returns, the lodgment deadline for the current year reverts to 31st October, 2020.
There is automatic extension given to a client if they are already registered with a tax agent. However, if you are filing tax returns on your own and you have missed your deadline, in that case – the Australian Tax Office (ATO) is not that flexible in providing extensions unless there are extenuating circumstances. If you have outstanding returns or are late, the best thing to do is engage with the ATO and they are likely to be more lenient.
Businesses, in particular, have received a generous concession – they can write off assets that are purchased from March 2020 onwards until 31st December 2020. For example, let’s say a business in the construction industry has bought a truck or an excavator and it has cost them $150,000 per asset, then they can instantly write that off. This is one of the ways where businesses are being assisted (to sustain) by bringing forward depreciation deductions and reducing their present tax liabilities. Previously that limit was only up to $30,000 for assets to be instantly written off. It has been extended to $150,000 at this time.
The best thing that business owners can do is keep good records and maintain separation between their personal and business affairs. Due to COVID-19 businesses have received assistance from the government. This assistance came in the form of Cash-Flow boost and JobKeeper payment. Cash-Flow boost, which is received by businesses, is not included in a business’ assessable income. Jobkeeper payment on the other hand, which is a reimbursement of employee wages, is assessable income.
Most businesses manage their business using one form of accounting software or another. However,without appropriate training, business owners might not have the knowledge to perform the task of bookkeeping well. That is where a qualified accountant plays a very important role – to account for right expenses using the right coding. Many business owners with training and support from their account can go a long way to getting this right. We (McFillin Partners and Accountants) are primarily XERO Accounting software-based organisation and we are Platinum partners with them as well.
From the perspective of individuals, anyone who uses motor vehicle for work-related purposes – they can claim expenses for that (for work related travel other than driving to and from work). But the catch is that they need to maintain a logbook. Logbook is a system where you are recording your trips for work-related/business purposes along with trips for personal usage. You have to maintain a logbook for a period of twelve weeks – which can be used for upto five years, provided the working conditions and the use of vehicle has not changed. Businesses can also claim similar expenses – provided the businesses themselves hold the asset in the company/organisation. However, if there is any private use of the vehicle by an employee this would be classed as a fringe benefit and may attract fringe benefits tax.
A lot of businesses have incurred some form of loss due to the effects of COVID-19. Thankfully in Australia, businesses that have incurred losses can carry forward the losses to the following year to be offset against future profits. These losses need to be applied as profits are generated. If someone operates as a sole trader, they may be able to offset losses against other income (e.g. employment income) if they meet the requirements within the non-commercial loss rules.
The answer to both options is YES. You can pause your business. You just may need to continue to pay overhead costs for contracts you have entered into (e.g. rent, asset leases). Your tax registrations may remain active. If you want to completely cease the business, in that case you need to deregister your business from GST, need to finalize your affairs with the tax office, lodge your business activity statements (BAS), do your tax returns, pay any outstanding liabilities to suppliers and then you can close your business. Following the close of business, in the next 28 days you have to deregister your Australian Business Number (ABN) as well. If a business is not able to pay all suppliers or the ATO, then they may need to consider appointing a liquidator (if they are a company).
Certainly, you can lodge your income tax return online and using MYGOV it is quite simple, particularly if you are a salary and wage earner with a few deductions. However, if you have any additional items or complications (e.g. you have traded shares, own a rental property or a business), then it might be worth getting advice from a tax agent or having them prepare your return to ensure that potential deductions are claimed and that items such as capital gains tax are attended to appropriately.
We have a wide range of clients from different industries and each have their own preferences for accounting software. Most of our clients are either using Xero, MYOB or Quickbooks Online.
The firm encourages its staff to pursue their accounting qualifications and provides support to staff who wish to do so. The accounting staff either have a qualification or are currently pursuing a qualification as either a Chartered Accountant or Certified Practising Accountant.
Between the three partners alone, there is over 50 years of public practice accounting experience. At McFillin and Partners, constant training sessions are conducted to ensure that accountants are up to date. The training sessions are held every month and presented by members of the team (one junior and one senior accountant). Apart from tax accounting, we also provide support general accounting, management accounting, bookkeeping and self-managed superannuation fund compliance.