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With just over one week until the end of financial year upon us, taxpayers and business owners alike are being encouraged to take advantage of some of the employment schemes and tax breaks currently on offer.
With a number of temporary programs soon coming to an end, the growth facilitator at Business Australia, Keith Madden CA, has indicated it’s “crucial” to be on top of things when taxpayers and business owners complete their tax return in the months ahead.
He flagged that “some of the items small businesses might want to consider this year include salary sacrificing, asset write-offs and bad debts”.
“It is important to note that the existing instant asset write-off scheme for assets of up to $150,000, purchased between 12 March 2020 and 31 December 2020 and installed ready for use before 30 June 2021, by businesses with an aggregated turnover of less than $500 million, is ending, and will revert back to assets up to $30,000 for businesses with turnover of less than $50 million,” the chartered accountant also highlighted.
With all the changes, he’s urging businesses to “check out the information on tax, government programs and grants to ensure your business is making the most on what’s on offer to help drive growth”.
He’s also offered up a number of schemes for small- to medium-sized business owners and employees ahead of tax time:
- Lower tax
Check to see if you are eligible for the lower tax rate. Businesses with an aggregated annual turnover of under $50 million will see a tax rate drop of 1 per cent, down to 25 per cent for the 2021–2022 tax year.
- Take advantage when hiring
Mr Madden has also advised business owners to be aware of benefits for employers looking to hire and train new team members.
“If you are planning on hiring new staff or bringing in apprentices or trainees, check if they are eligible for a wage subsidy,” he advised.
He flagged a number of schemes as worthy of attention: JobTrainer, the Boosting Apprenticeship Commencements program, JobActive, Transition to Work and ParentsNext.
- JobTrainer is being extended until the end of 2022 and supports training and upskilling in areas such as digital sectors and aged care.
- The Boosting Apprenticeship Commencements program is paying businesses a 50 per cent wage subsidy for any new apprentices or trainees who commence work prior to 31 March 2022.
- JobActive, Transition to Work and ParentsNext programs are all set to increase their wage subsidies to $10,000 through a $4.6 billion investment aimed at helping vulnerable unemployed Australians find work and help with the economic recovery.
- Temporary full expensing
This will be extended for an additional year until 30 June 2023.
According to Mr Madden, businesses with an aggregated turnover of less than $5 billion can “claim immediate deductions for the business portion of the cost of eligible new depreciating assets”.
It’s the same for businesses with an aggregated turnover of less than $50 million, who can immediately claim the business portion of eligible second-hand depreciating assets.
It should be noted that such claimable assets must be acquired from 7.30pm AEDT on 6 October 2020 and first used or installed ready for use by 30 June 2023.
- Temporary loss carry-back scheme
Another scheme that is set to continue for another year, Mr Madden has highlighted, is how Australian businesses with turnover of less than $5 billion can offset losses incurred in the tax years 2019–2022 against taxed profits related to the 2018–2021 tax years.
- The WFH shortcut
The ATO first introduced the working-from-home claim shortcut in 2020 in acknowledgment of the thousands of Australians suddenly forced to work from home.
Mr Madden highlighted that this shortcut is also applicable for the 2020–2021 tax year and allows employees to calculate their expenses with minimal record-keeping requirement.
He advised: “You can claim on expenses such as the electricity you used while working, the decline in value of your equipment, phone and internet expenses, home office equipment and more. The shortcut allows you to easily make a claim to the ATO for these combined expenses at a rate of 80 cents per hour.”
All it requires, according to the accountant, is that an employee needs to be able to show the hours worked from home.
There is one caveat though: For those who do choose to use the shortcut method, no other claims for working from home can be made.
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