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Tax time is different this EOFY, but how?

A raft of economic stimulus measures has kept many businesses afloat through the COVID-19 recession. Now, companies are being urged to get up to speed on potential new EOFY considerations as a result.

Rohit Raghavan, a Partner at PwC, says that doing the legwork now could save hassle with the Australian Taxation Office later.

JobKeeper rules

The strong focus in the ATO, according to Raghavan, is around reviewing the thoroughness and veracity of JobKeeper claims.

“Given the size and volume of the JobKeeper program and the fact that it is a self-assessment program, there are several pretty specific, and complex, administrative requirements to it.

“It's something which we know the ATO is heavily monitoring.”

Raghavan says businesses need to meet the requirements for eligibility and also be able to provide evidence.

He recommends you:

  • Carefully review the JobKeeper qualification requirements, including the relevant turnover tests and rules regarding employee eligibility.
  • Secure all the documentation you may need to prove you meet this threshold.
  • Ensure that you have prepared and collated all the other necessary documentation, such as ATO registrations and employee declarations.
  • Make sure you continue to comply with the ongoing requirement to pay employees prior to the end of the relevant fortnights for which you are claiming JobKeeper.
  • Comply with monthly reporting requirements to the ATO.

Capital investments

COVID-19 has seen a temporary increase in the instant asset write-off. There are also accelerated depreciation deductions available.

Key to accessing these measures is making sure your purchase is acquired, installed and in use by the cut-off dates. And supply chain disruptions may stop some items from being delivered in a timely way.

Raghavan suggests approaching capital investment with planning and thoughtfulness to ensure that eligibility requirements are met for the instant asset write-off/accelerated depreciation.

Payroll tax changes

In WA, payroll tax for small and medium-sized businesses will be waived from 1 March to 30 June.

To be eligible, a business must have a total Australia-wide annual wage bill of less than $7.5 million in 2019-20.

Furthermore, you must still lodge your EOFY annual reconciliation by the due date.

Meanwhile, the payroll tax threshold will be increased to $1 million on July 1, 2020.

Land tax relief

In WA, commercial landlords that provide struggling small businesses with rent relief will be eligible for grants up to the value of 25 per cent of their land tax bill for the relevant property.

Working-from-home shortcut

Employees working from home can claim an 80c-an-hour deduction from March 1 to June 30, 2020, if they:

  • are working at their job from home, not just carrying out minimal tasks like checking emails or taking calls, and;
  • have incurred additional running expenses as a result.

The new deduction shortcut doesn't require employees to have a dedicated work area, like a private study. Employees can be directed to the ATO website for full details.

Get it to the professionals, early

If you're expecting a rebate, getting your documents to staff and to the ATO on time will mean cash in hand, faster.

Raghavan says that good tax governance is also critical.

“The ATO has been incredibly business-friendly and helpful in administering the stimulus program and providing relief, extensions and deferrals,” he said.

“However, it's not unreasonable to think that at some point in time, a focus will need to come back to taxpayer reviews and audits and a focus on tax revenue collection.”

It will be important to ensure that you are well prepared with support for your tax positions in the event of a review.

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