2020 End of Year Tax Planning: Business Income Tax
With end of financial year quickly approaching, now is the time to consider some end of year tax business planning strategies. We have compiled a list of things you might want to consider.
Immediate asset write-off threshold
INCREASE Small businesses can claim a deduction for the business portion of assets each costing up to $150,000. To claim this in the 2020 tax year, the expense must be incurred prior to 30 June 2020.
This measure has been extended to 31 December 2020, however assets purchased between 1 July and 31 December will be eligible to be claimed in the 2021 tax year.
Accelerated depreciation
Until 30 June 2021, businesses with aggregated turnover less than $500 million for the 2019-20 and 2020-21 income years who do not use the simplified depreciation rules, may be eligible to deduct an amount if the asset is a qualifying asset.
The amount you can deduct in the income year the asset is first used or installed ready for use is 50% of the cost with existing depreciation rules applying to the balance of the asset’s cost.
Superannuation guarantee amnesty
Where you have failed to pay superannuation on behalf of Employees (including directors) for any quarter between 1 July 1992 and 31 March 2018 by their due dates you may be eligible for the super guarantee (SG) amnesty.
If you haven’t previously disclosed your SG shortfall and you aren’t subject to a current or previous audit. Unlike normal SG paid late, superannuation paid during the amnesty can be claimed as a tax deduction and not incur the usual administration charges or penalties.
Employers have until 7 September 2020 to disclose, lodge and pay unpaid SG amounts for their employees. Only payments made before 11:59 pm on 7 September 2020 will be tax deductible.
Employers who have already disclosed unpaid SGC to the ATO between 24 May 2018 and 6 March 2020 do not need to lodge again.
NSW small business COVID-19 support grant
The NSW government is providing financial support to ease the pressures on small business as a result of COVID-19 up to $10,000 per business. The grant can be used for unavoidable business expenses.
Small business recovery grant
The NSW State Government announced an additional grant of $3,000 for small businesses to assist with reopening safely and welcoming back customers last week.
Businesses who have experienced a decline in turnover of at least 30% from March to July 2020 compared to the equivalent period (of at least two weeks) in 2019 may be eligible for this grant. Applications will open on 1 July 2020. Further information will be sent out as it is released.
More information
Feel free to contact the office and arrange a phone meeting with our team on (02) 9529 4411.
