2020/21 New Financial Year tips.
Glad that last year is behind us? It does feel good to have a new start, despite Covid-19, recession and enormous changes to all our lives! Somehow a fresh start has all the hallmarks of opportunity. No matter your situation we’re here in the trenches with you, only a phone call away.
As the new starts here’s a myriad of helpful tips and insights on tax time changes.
State grants and support programs
Each state and territory has announced various grants and assistance packages which you may be eligible for. You can find a roundup of these grants on the Government’s Business website. Alternatively, you can also contact us so we can discuss which options are most suitable for your business based on your eligibility and needs.
ATO Tax Time Toolkit
The ATO’s Tax Time Toolkit has some useful guides for small businesses on topics such as: home-based business expenses, motor vehicle expenses, travel expenses and pausing or permanently closing your business due to Coronavirus. Ask us if you have any questions.
Car expense rate increased
The ATO will has now raised the cents per kilometre deduction rate for motor vehicle expenses to 72 cents for this financial year (starting 1 July 2020).
Growth During a Recession
The battle against COVID-19 has no doubt had an impact on global financial markets. As a result, consumers are tightening their belts, and general demand is falling. These signs indicate that the next economic downturn may just be right around the corner.
Throughout history, we have seen that recessions can be brutal especially for small businesses. However, it is possible to grow a stronger business during a recession, and we’re here to help. In this Harvard Business Review article, they list four steps to capitalise on the problems encountered by your rivals during tough economic conditions. These are:
- Invest in research and development.
- Spend some time learning about the customers of your weakest competitors.
- Identify your most critical suppliers and distributors.
- Think carefully about your talent needs – now could be a good time to hire!.
If you want to talk about your specific situation, please get in touch with us and we’ll help you work out a strategic plan to build a successful future-proof business.
Boosting Your Digital Capabilities
Small businesses across Australia can access individual support to grow their digital capabilities through the Australian Small Business Advisory Services Digital Solutions. This program offers small businesses with fewer than 20 full-time employees and sole traders with high quality advice on a range of digital solutions to meet their business needs at a subsidised rate. More information can be found here.
Second Round of Cash Flow Boosts
If you received initial cash flow boosts, you’ll automatically receive additional cash flow boosts when you lodge your activity statements for each monthly or quarterly period from June to September 2020. The amount will be equal to the total amount of initial cash flow boosts you received and will be split in either two or four installments, depending on your reporting period.
If you lodge:
- quarterly – you will receive 50% of your total initial cash flow boosts for each activity statement
- monthly – you will receive 25% of your total initial cash flow boosts for each activity statement
You can find more information here.
Minimum Wage Increase
The Fair Work Commission has announced a 1.75% increase to minimum wages. This will apply to all award wages and the increase will start on 3 different dates for different groups.
Group 1 Awards – from 1 July 2020
- Frontline Heath Care & Social Assistance Workers
- Teachers and Child Care
- Other Essential Services
Group 2 Awards – from 1 November 2020
- A range of other industries
Group 3 Awards – from 1 February 2021
- Accommodation and Food Services
- Arts and Recreation Services
You can find the complete list of awards in each group here.
For those not covered by an award, the new national minimum wage will be $753.80 per week or $19.84 per hour. This applies from the first full pay period starting on or after 1 July 2020. If you’re not sure which award applies or if you have any questions, get in touch with us.
Instant Asset Write-Off Expansion
The Instant Asset Write-off has been extended for six months to 31 December 2020, which means Australian businesses with less than $500 million annual turnover will have more time to take advantage of the write-off and invest in assets to support their business. The instant asset write-off applies on a per asset basis, so eligible businesses can immediately write-off multiple assets provided they each cost less than $150,000.
You can find more information on which assets you can claim as an immediate deduction here, but feel free to contact us so we can walk you through the different thresholds, exclusions, and limits.
Company Tax Rate Reduction
Starting 1 July 2020, the company tax rate will be reduced to 26% for small- and medium-sized businesses, as part of a larger progressive plan to reduce the company tax rate to 25% from 1 July 2021. This applies to all base rate entities (BRE) – companies, corporate unit trusts, and public trading trusts – which have an aggregated turnover of less than $50 million where 80% or less of the entity’s turnover for the year is classified as base rate entity passive income. More details can be found here.
Get in touch
We appreciate your patience as we’ve experienced a busy and challenging financial year. We remain dedicated to supporting you and your business as we move to the next stage. Remember – we are here to help!
Have a good week and we hope you and your family are well.