CALL US ON 02 8239 8200

EOFY 2021 – what’s new, what’s different, and why it matters

EOFY 2021 – what’s new, what’s different, and why it matters
May 3, 2021 va-admin

Being prepared for end of financial year (EOFY) and tax season is always important. However, with COVID-19 having impacted the most – if not all – of FY2021 and individuals and business owners alike across Australia needing to deal with the impact of the pandemic and associated lockdowns, tax time this year may prove even more challenging than usual.

Your business finances need your full attention at the best of times, so the added pressures of 2020-21 will undoubtedly have made things even more challenging.

To help, we’ve listed below the 5 most important areas for you to address as June 30 approaches, to ensure you’re well prepared and taking advantage of any support on offer as we head into what (we all hope) will be a better, simpler financial year.

1. Note how your wages fluctuated

The COVID-19 shutdowns found many businesses having to alter wages and salaries of their staff. While a lucky few have seen their payroll return to pre-COVID levels, many others have not been so fortunate.

Some fortunate businesses are in a good enough position to offer staff bonuses to make up for any lost income over the last year, or as a reward for a job well done, sticking with you through the toughest of times.

Bonuses can be claimed as tax deductions as well impacting employee morale, so if you’re planning on rewarding staff, do it before 30 June to maximise your deductibles.

2. Accept help where it’s offered 

To assist with cash flow, this year, the ATO has allowed for both the deferral of tax payments and the refunding of PAYG credits paid to date.

Payment deferrals were extended up to 14 September last year, with no interest and/or penalties applied after the deferrals were applied for.

The ATO has also provided tax-free cashflow boosts to eligible businesses, anywhere from $20,000 to $100,000. These will be delivered through credits when those eligible businesses lodge their activity statements.

3. Claim your instant asset write-offs

If your business needed equipment upgrades, new computers, replacement vehicles or any other depreciable business asset during this last financial year, the government’s $150K write-off meant you didn’t have to depreciate the value of these items over a time; the cost of the asset can now be deducted. This can mean considerable tax savings for you.

Up to 31 December, the instant asset write-off threshold was $150K (up from $30K), and the eligibility range covers any business with an aggregated turnover of less than $500 million (up from $50 million).

4. Review your ‘bad debts’

Many businesses simply will not have survived the impact of COVID. Some of those may be customers or clients who have outstanding unpaid invoices. If that’s the case, there’s nothing to gain from paying tax on income you may never receive.

While you should still try to collect these payments, bear in mind that any you determine as ‘bad debts’ should be documented so that you can determine whether they meet the ATO’s deductibility requirements.

While you’re at it, amend your BAS for GST already paid to the ATO on these bad debts. It’s more important than ever that you review how recoverable your business’ debtors are.

5. Don’t forget superannuation      

Superannuation is only deductible in the financial year actually paid. Knowing that, endeavour to pay any outstanding superannuation to your employees by 30 June.

Most individuals and businesses can claim up to $25K in concessional superannuation contributions per person; but this also needs to be done by 30 June. We recommend you make time in your processes to allow for ‘wiggle room’ to ensure it’s all done with time to spare.

We’re here to help!

Tax returns and tax refunds, not to mention knowing what is and isn’t deductible, can be a complex and overwhelming business. During FY2020-21 a variety of new rules and regulations, concessions, and support measures were introduced, so it will definitely help if you have a trusted adviser on-call to help you navigate the process.

Vital Addition is a team of dedicated tax, superannuation, and SME specialists and can assist you with any concerns you have regarding your EOFY finances or tax returns between now and June.

If you would like to arrange a complimentary strategy call, get in touch! Call 02 8239 8200 or email info@vitaladdition.com.au today.

CONTACT US