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Tax Questions Answered

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Around June each year, people start thinking about all matters tax-related.  Covid-19 has probably created even more questions this year, especially for small business operators.

I’ll briefly cover a few hot topics – ones that perhaps have been on your mind too.

IS THERE AN FBT EXEMPTION FOR SMALL BUSINESS?

 At this stage, no.  I believe it has been mentioned in the press as an option to help out small business during the Covid-19 pandemic, but at this stage I don’t believe the government has any plans to implement this.

WHAT COVID STIMULUS IS TARGETED AT SMALL BUSINESS?

The main stimulus package for small business is the JobKeeper – this enables a “business participant” (eg sole trader, partner in a partnership) to receive $1500 a fortnight providing they can prove they have had a 30% decrease in income due to Covid-19.  Under the current arrangements you only have to meet the 30% reduction for 1 month and you are entitled to receive JobKeeper for as long as it runs – regardless of your income for the other months.  JobKeeper is also available for employees of the business provided you meet the relevant requirements.  Please note the government is reviewing this monthly, so legislation may change – speak to your accountant if you are not sure.

Small business can also access the $150,000 Instant Asset Write-Off, enabling a business to purchase an asset that cost less than $150,000 and claim a tax deduction in full – rather than have to claim it over the life of the asset.  The good news is this concession has just been extended to the 31 December 2020. Please do seek advice from your accountant, however, as there are some circumstances where it may not be in your best interest to claim the amount in full.  Also note that to receive the deduction for the 2020 Financial Year you must have the asset installed and ready for use by the 30 June 2020. Therefore, if you pay for a motor vehicle in June but the car is not delivered to you until July, you will have to make the claim the next year.

The other concession for small business – is the ability to access your superannuation tax free. You will need a 20% reduction in income to be able to access this through the ATO.  We highly recommend you seek professional advice before doing this.

HOW CAN I CLAIM MY HOME OFFICE USE DURING COVID-19?

The ATO is allowing 80 cents per hour for people who work from home during the March 2020 to June 2020 period.  You are required to keep a representative diary (say 4 weeks) of the time you work from home to be able to make the claim. If you use this method you will be unable to claim any of your personal computer costs, internet expenses, desks, chairs, phone, or electricity relating to the home office for this period.

MY IDEAL REFERRAL?

Most of my clients are salary and wage earners and micro-businesses.  This includes individuals with rental properties, share portfolios and managed fund investments.  I have some larger clients but these clients are well looked after on a day-to-day basis by their bookkeepers.  I am best suited to help clients that meet the above criteria.  I am also experienced in Self Managed Superannuation Fund tax and audits – so can help with these as well.