Are you a small business owner? I dare say you get bogged down with all the administrative work involved. One of these is taxation and what you can, and can’t, deduct for tax purposes. When thinking about your company tax returns, here are a few pointers.

Small Business Asset Write Off

The eligibility threshold depends on the date of the asset purchase which is outlined below:

For businesses registered for GST (Goods and Services Tax), the threshold is calculated on a GST exclusive basis, but for businesses not registered for GST, the threshold is calculated on a GST inclusive basis.

New Business Deductions and Some of Their Implications for Company Tax Returns

Professional expenses associated with starting a new business, such as legal and accounting fees, are deductible in the financial year those expenses are incurred rather than deductible over a five-year period as was the case previously. 

Superannuation Deductions

Ensure superannuation guarantee payments for employees are up to date, and report and rectify any missed payments to the ATO.

Employers can claim deductions for superannuation contributions made on behalf of their employees in the financial year they are made.

The superannuation guarantee rate is 9.5% of the employees ordinary time earnings. 

Contributions are considered paid when the super fund receives them.

Cash Payments

The ATO has announced that unreported ‘cash in hand’ payments made to workers from 1 July 2019 will not be tax deductible. That is, entities will no longer be entitled to a tax deduction if they fail to withhold amounts under the PAYG system.  

Businesses can still pay in cash. This is to stop businesses avoiding paying PAYG withholding and super liabilities for employees. 

Payments made to contractors where the contractor does not provide an ABN and the business does not withhold any tax will also not be tax deductible from 1 July.

Employers who mistakenly classify their employee as a contractor will not lose their deduction where their worker provides them with an ABN. 

Prepaid Expenses

Expenses such as rent, registration fees and insurance paid before 30 June that end in the next financial year can be claimed as a deduction in this year’s tax return.

Paying Staff Bonuses

If you want to pay staff a bonus ensure they are calculated and documented in a properly authorised resolution prior to the end of the financial year to enable a deduction to be claimed where such amounts are not paid or credited until the next financial year.

Taxable Payments Reporting System – Couriers and Cleaners 

The taxable payments reporting system has been extended to contractors in the courier and cleaning industries from 1 July 2018.

Payments need to be reported to contractors for the financial year ending 30 June 2019 by 28 August 2019.

Many Hands Make Light Work of Taxation for Small Businesses

If your business uses an online bookkeeping program such as MYOB, XERO, Quickbooks or Reckon One, if you have not already done so, send us an accountant invite. 

We are certified XERO partners and familiar with all the major software programs. 

Davis Accounting are specialist small businesses accountants based in Campbelltown and Parramatta. Please feel free to contact our accounting firm for help with your company tax returns  and other accounting needs.

Davis Accounting Services Pty Ltd ABN: 44 131 659 857 Liability limited by a scheme approved under Professional Standards Legislation

**Disclaimer: Be advised this information is of a general nature only. Specific advice needs to be obtained for your individual situation. Neither the firm nor any of its employees accepts any liability for any loss or damage to any person as a result of reliance on the rates and information set out on this newsletter.