EOFY and COVID-19: What needs to be reported?
As the 30th of June creeps up, 2020-2021 has been a financial year like no other. There have been many changes and government initiatives announced throughout the COVID-19 pandemic. JobKeeper and Cash Flow Boost credits all need to be reported, as well as the annual Single Touch Payroll (STP) reporting. It’s likely your business is going to need more information or help to lodge your business’ tax return, so it’s smart to get started now.
Hire A Bookkeeper
If you’re struggling to keep on top of the new tax changes and incentives, it’s a good idea to find a good bookkeeper dedicated to keeping up to date with government initiatives and changes. Ensure the accountant you choose is a member of a professional body, such as the Tax Practitioners Board (TPB) Register. Members of the TPB must have recognised tertiary qualifications and comply with professional standards.
Understanding JobKeeper Reporting
If your business operates as a company structure and your employees received any JobKeeper payments, these are classed as assessable income, which means they need to be included in your business’ tax return. Likewise, businesses operating as a partnership or trust need to report JobKeeper payments as business income in their partnership or trust tax return. Additionally, if you are a sole trader who received JobKeeper payments, you need to include your payments as business income in your individual tax return.
Reporting Cash Flow Boost Credits
The federal government’s Cash Flow Boost payments to companies with a turnover of less than $50 million are classed as nonassessable income. This means your business will not pay tax or GST on this income. How these credits are reported in your tax return or financial statements depends on your business structure. If you received any Cash Flow Boost credits, it’s best to check with your accountant on the best way to report these credits.
2021 Federal Budget Tax Incentives
In this year’s budget, the federal government introduced temporary full expensing measures for this financial year.
The full expensing measure covers the period from 6th October 2020 to 30th June 2022, for businesses with a turnover of up to $5 billion. It allows businesses to deduct the full cost of eligible depreciable assets, such as machinery or vehicles in the year they are first used.
Another tax incentive introduced by the Federal Government is the temporary loss carry back extension. If your business is eligible, you can elect to receive a refund when you lodge your 2020-21 return. This allows you to offset tax losses against previous business profits on which tax has been paid to generate a tax refund. Losses incurred in 2019-20 and 2020-21 can be carried back against profits made in or after 2018-19.
Finalising Single Touch Payroll Statements
Single Touch Payroll (STP) is an Australian Taxation Office (ATO) initiative to streamline business reporting. Employers must report employee payments electronically to the ATO with every pay cycle, including salaries, allowances, deductions, pay as you go (PAYG) withholding tax and superannuation. Utilising cloud-based software, such as MYOB, can link directly to STP which saves time, reduces errors and simplifies reporting.
If you require more information on 2020-2021 EOFY reporting, don’t hesitate to contact one of our consultants.
This information is general in nature and not to be considered as tax advice. For advice on your individual business situation, Acacia recommends contacting a specialist tax advisor.