EOFY tips for small business from the ATO
At the end of the financial year it’s important to make sure your tax affairs are in order. The Australian Tax Office has provided information about recent changes that might affect your business and a checklist of common mistakes you’ll want to avoid.
Changes to tax regulations are happening all the time and, at the end of the financial year, it’s important to check whether any recent changes will affect your business. You might also want to review the mistakes most commonly made by small business owners.
The Australian Taxation Office (ATO) has provided the following information and tips to help you meet all of your obligations.
Recent changes that might affect your business:
1. Changes to depreciation rules for small businesses with a turnover of less than $2 million for the 2012-13 income year
- The small business instant asset write-off threshold increases from $1,000 to $6,500.
- Small businesses can claim an accelerated initial deduction for motor vehicles acquired in 2012-13.
- The long life small business pool and the general small business pool have been consolidated into a single pool to be written off at one rate.
Find out more about eligibility for small business concessions
2. Contractor reporting for businesses in the building and construction industry
From 1 July 2012, businesses in the building and construction industry must report to the ATO the total payments they make to each contractor for building and construction services each year. The first taxable payments annual report is due 21 July 2013. As long as you have appropriate software and an AUSkey you can lodge your report quickly and easily online.
3. Changes to superannuation that affect employers
The compulsory super guarantee rate will be gradually increased from 9 percent to 12 percent over the next seven years. The first increase, from 9 percent to 9.25 percent, will take effect on 1 July 2013.
From 1 July 2013, the existing age limit for employee super guarantee eligibility will be removed. This means you’ll need to start making super guarantee payments for eligible employees who are 70 years old or over.
It’s important to make sure your payroll and accounting systems cater for both of these changes. If you have 19 or fewer employees you can use the free Small Business Superannuation Clearing House to pay your super contributions in one transaction to a single location.
Employers must also have a default super fund where they make super guarantee payments for employees who don’t have a preferred fund. From 1 January 2014, this fund must offer MySuper, which will eventually replace existing default products. Super funds will be allowed to provide MySuper products from 1 July 2013 and will provide information to help with the changeover.
Obligations that some businesses overlook
- Keep comprehensive records when buying, owning and selling business assets.
- If you sell or dispose of property or shares you may need to report a capital gain and may be eligible for small business concessions.
- If you’re a contractor or consultant and you earn personal services income, special tax rules may affect the amounts you include in your assessable income and the deductions you can claim.
If you have employees
- Ensure that your employees receive their payment summary before 14 July 2013.
- Issue payment summaries even if no tax was withheld.
- Be careful not to include any reportable employer superannuation contributions on the employee payment summaries if you only make compulsory super guarantee payments.
- Use the latest tax tables. Updated tax tables will be available from mid June at ato.gov.au/taxtables.
- If you developed your own payroll software ensure that you update withholding rates from 1 July 2013. If you use commercial payroll software contact your software provider for any updates.
- Lodge your payment summary annual report as early as possible but no later than 14 August 2013. You can now lodge your payment summary annual report using the Business Portal.
Get more information for small businesses from the ATO or speak to your NAB Business Banker, or NAB Financial Planner.
You may also be interested in:
- Personal and business tax changes from the 2013 Federal Budget
- Is your business EOFY ready?
- Federal Budget 2013’s impacts on small business
This information provided herein is general in nature and does not take into account your personal circumstances. Accordingly it is recommended that you seek independent financial advice. Should you wish to rely on this advice to determine your tax obligations, it is recommended that you seek appropriate tax advice from a registered tax agent.