Top tips for tax time 2021. Check out these simple tax tips for SMEs, to maximise your return. From wage subsidies to interest-free periods, get the low-down here and fast.

1. Asset write-off incentives

Make sure you’re across the government’s asset write off incentives, including the latest temporary full expensing. This allows businesses with an aggregated turnover of less than $5 billion to immediately deduct certain portions of the cost of eligible new depreciating assets. For example, cars and equipment.

For businesses with an aggregated turnover of less than $50 million, the temporary full expensing can also apply to eligible second-hand depreciating assets.

You might also be able to deduct portions of improvements to eligible depreciating assets and to assets acquired before 6 October 2020.

Eligible assets purchased between 1 July – 31 December 2020 may also qualify for the instant asset write-off up to $150,000.

Other common assets that might be eligible include;

  • Office fit-outs
  • Accounting software
  • Computers, laptops or tablets
  • Security systems

More information from the ATO.

2. Get in early

Make sure you and your business is prepared and organised for this year’s tax obligations. This often means locating records from the last financial year. Some businesses will still require Centrelink / JobKeeper or JobSeeker inputs.

Similarly to last year, filing tax isn’t an easy process as many businesses are eligible for deductions and / or new obligations.

The sooner your business lodges your tax return, the faster you’ll have access to eligible refunds or details of any additional payments.

3. Loan repayments and interest free periods

Some businesses may have accessed the government’s Small Business Loan scheme. Repayments aren’t eligible for tax deductions, however, interest and administration charges are deductible

As these loans have a no interest period, you’ll be able to claim against interest once the no interest period ends.

Make sure to enter the information and loan details carefully as software codes regarding these loans can be tricky.

4. Deductions for unrecoverable income

Many Australians have been hit by the pandemic and struggle to meet debt repayments. Some businesses might be eligible to write off particular unrecoverable income or ‘bad debts’. If your business is owed money from a debtor, you may be eligible.

Additionally, you can claim a tax deduction for the amount that’s been written off.

Make sure to double check your debtors and assess which ones won’t be able to repay your business.

Find out more via the ATO website.

5. Start next financial year with improved record systems

It’s understandably important to keep financial records, something that can be especially tricky when dealing with a year’s worth of records. Both paper and electronic records are acceptable and if you’ve digitised your business, recalling financial records shouldn’t be too much of a headache.

Generally, businesses are required to keep most records for five years, and they should include things like:

  • Asset purchases
  • Vehicle records
  • Expense invoices
  • Sales receipts
  • Credit card statements
  • Employee records
  • Bank statements
  • Lists of debtors and creditors

In addition to making tax time easier, good record keeping comes with other benefits:

  • Keep track of your business’s health by having the ability to make up-to-date decisions.
  • Accurate cash flow management.
  • The ability to efficiently provide financial documentation when requesting finance from lenders

To get started, consider implementing accounting software like Xero. In most cases, there’s no need to keep paper records if you have electronic versions. Businesses often find that this frees up office space and saves costs on paper and time.

The ATO also accepts images of business paper records, so if you’re in a rush, you can take a photo of a paper record you might acquire.

Make sure to store records in a secure digital place, ideally with a back up.

At the end of the day financial year

The EOFY is both exciting and a little nerve racking. Asset finance and the auto industries see significant deals during this period – make sure your tax return is equally as significant.

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