2020 end of financial year checklist.

What's changing in terms of legislation this year?

The first thing to note is that the Federal Budget has been delayed this year until 6th October amid all of the COVID chaos. We expect there to be a lot in this budget that impacts small business. As usual, we will update you with all the changes when the time comes.

Tax rates

In good news, the Company Tax Rate reduces to 26% starting on the 1st July 2020. This is for Companies with a turnover of less than $50m. This is down from 27.5% in this current year and will reduce to 25% on 1st July 2021.

Single Touch Payroll

Single Touch Payroll requires you to report to the ATO each time you pay your employees. This isn't new and most of you have been doing this for the last 12 months. Just remember each time you run payroll in Xero you need to click the green file button.

Reporting payments to contractors

If you are in the building & construction, cleaning, courier, road freight, IT, security, or investigation services you need to report to the ATO each year ALL payments you have made to contractors. This is known as a Taxable Payment Annual Report (TPAR). We need to report to the ATO all payments made to these contractors along with their ABN, address, and GST amounts.

The TPAR is due by 28 August 2020. If you do your own, then you can do this via the TPAR report within Xero, just make sure all payments made to contractors are appearing. Reach out to us if you need a hand.

If Link prepares your TPAR, we’ll be in touch in July/August if we need any additional contractor details. If you use Receipt Bank or Hubdoc to capture your invoices, all information should be there.

$150,000 instant asset write-off

As part of the COVID measures, any assets purchased between 12 March and 30th June that cost less than $150,000 are able to be claimed as a tax deduction in full at the time of purchase.

This has now been extended to the 31st December 2020.

It's important to remember this isn't cashback, it's simply a reduction of your taxable income, therefore a reduction in the tax you have to pay.

Any assets you purchased prior to 30 June 2020, will give you the tax benefit when lodging your 2020 tax return. Any assets purchased after 30 June 2020 will give you a tax benefit when you lodge your 2021 income tax return.

Don’t forget to reach out to us if you need finance to purchase an asset – we can have our finance specialists get you a quote on the best possible interest rate.

Due dates & action items

There are always a million things to do as a business owner. 30 June just happens to bring a lot of those things together to be done by a deadline! Great work on actioning everything for tax planning for the year. Don't stress about any of the due dates below, we will take care of the lodgements for you.

Stocktake - 30th June

Yep, we know everyone HATES stock-takes. But unfortunately for those of you holding any stock, these are mandatory. Depending on the actual movements in stock, it may have a tax benefit for you this year. in any case, it makes sense to know what the value of your stock on hand is.

Update employees pay rates

Don't forget you need to ensure any employees on award wages have pay rates updated from the 1st pay run post 30 June.

PAYG payment summaries

PAYG Payment Summaries do not need to be provided to your employees anymore. With the introduction of Single Touch Payroll, instead of preparing and lodging Payment Summaries, we now need to finalise STP. Once finalised the ATO is notified and will make the earnings and tax withheld for the year per employee ready for them in MyGov. This is due on the 14th July.

If you do your own payroll, then you can finalise your annual STP in Xero ASAP after the last June pay run. If Link does your payroll, then we’ll be managing this for you after 30 June.

Superannuation

Super for the June 2020 quarter is due by 28 July 2020. However, if you want the tax deduction in the 2020 financial year, you need to have this processed in Xero by the 24th June at the latest (the reason it needs to be done a bit earlier is because it takes a few days for the super to be processed, debited from your account then allocated to your employees). Get it approved and paid so you don’t miss out on the tax deduction.

Taxable Payment Annual Reports (TPAR)

The TPAR is due by 28 August 2020. If you do your own, then you can do this via the TPAR report within Xero, just make sure all payments made to contractors are appearing. Reach out to us if you need a hand.

If Link prepares your TPAR, we’ll be in touch in July/August if we need any additional contractor details. If you use Receipt Bank or Hubdoc to capture your invoices, all information should be there.

June quarter BAS

Due for lodgement by 25th August.

JobKeeper

In order to be paid your monthly JobKeeper amounts, we need to report to the ATO your actual income for the previous month as well as the estimate for the next month. We have 14 days to do this after the end of the month, but obviously the quicker we do this the sooner you get paid. So please ensure you have reconciled Xero and or completed your Invoicing as soon as possible after end of month.

If you do your own JobKeeper monthly reporting get it done ASAP. If Link is managing your JobKeeper reporting, we’ll be in touch to confirm Xero is up to date and get your estimate for the current month turnover.

Cashflow boost

The final payment of Cashflow Boost Tranche 1 is made in your June BAS which means we will want to prepare our BAS's in July to ensure this amount is finalised. The ATO will then use the total of Tranche 1 to pay you Tranche 2. If you lodge Quarterly you will get 50% after lodging your June BAS and the other 50% in October. If you lodge monthly you will get 25% after lodging your June BAS, then 25% each month till October.