Advivo explains everything you need to do to get ready for the end of financial year (EOFY).
It’s that time of year again…. although these are unprecedented times, it is time to start preparing to finalise the financial year 2020 to complete budgets and scenario modelling for the new financial year. Effective tax planning reduces tax payable and that is so important in these times as it puts more money in the bank to help your business survive & grow. The team at Advivo Accountants and Business Advisors are busy preparing strategic tax plans and forecasting for many of our clients in preparation for exactly that.
New Shifts/Changes – 30 June
We have put together some reminders and highlights to help you in preparation for this end of financial year:
Single Touch Payroll (STP)
Since the implementation of STP employers will no longer need to send employees their payment summary/group certificate for the financial year. Instead they will receive their payment summaries now known as an ‘Income Statement’ directly from the ATO via their MyGov account.
For employers you will need to lodge a finalisation for the financial year in your accounting software via the STP channel by the 14th July 2020. Please note this process will differ for each accounting program.
Instant asset write-off for eligible businesses
From 12 March until 30 June 2020* the instant asset write-off threshold amount for each asset has increased from $30,000 to $150,000. The eligibility criteria has been expanded to cover businesses with an aggregated turnover of less than $500 million.
The eligibility criteria for the instant asset write-off and threshold are continually being updated. It is important to ensure that you are an eligible business and that the correct threshold amount is applied. If you can afford it, taking advantage of this increased incentive, which was introduced in response to the COVID-19 impact, could give your business a significant kick start to help it come out of the other side once we get through these difficult times. Assessing affordability will often come down to setting an effective budget and modelling for these possibilities. Have you got an effective budget and are you monitoring it monthly?
Be sure to contact us today if you need assistance with an effective budget or ensuring your business is eligible for the instant asset write-off.
*UPDATE 22/06 – At the 9th June 2020 the $150,000 was proposed to be extended from 30 June 2020 until 31 December 2020.
Claiming Tax Deductible Expenses while working from home due to COVID-19
The ATO recently announced a new method for claiming expenses when working from home during COVID-19. The general rules to claim deductions still apply but the new shortcut method means employees can claim 80 cents for each hour worked at home. See our full blog here for more information.
Capital Gains Tax
From 1 July 2020 there are changes to foreign residents and how the main residence exemption rules apply on the sale of property. Please refer to this ATO link for additional information: https://www.ato.gov.au/general/capital-gains-tax/international-issues/Foreign-residents-and-main-residence-exemption/
Use Our EOFY Checklists
We have a Pre and Post 30 June checklists that you can complete to make sure your business is ready for the EOFY:
Bear in mind that not everything on these lists will apply to everyone. They are generic lists designed to provide you with a reminder of what may apply to you and your business.
If you’re unsure on what does or doesn’t apply, please don’t hesitate to contact us!
Plan for Success – Now and in the future
Review your full budget vs actuals for the financial year to identify and explain any variances; this will form a key part in confirming your budget forecast for the next 12 months. It is important to consider scenario (upside / downside) as part of your analysis and this is extremely relevant in the current economic climate.
Make sure you set goals and targets that are achievable and that you communicate your goals to everyone relevant in the business. People need to know what they’re aiming for, including you. Don’t forget to set a monitoring and review process for these goals and targets at the same time. This way you and everyone else can stay up to date with the progress being made. Check out our Monthly Service Programs (MSPs) for just one way that we can help with monitoring and progress review options for your business.
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