ATO Reminders: Essential for Small Businesses
Stay Ahead: Essential ATO Reminders for Small Businesses
As we have passed the end of the financial year, small business owners must prepare for their tax return lodgement. The ATO has issued several reminders to help small businesses ensure compliance and maximise their eligible deductions. This article provides a comprehensive guide to these reminders, offering practical advice and expert insights to help you navigate tax time with ease.
Key Reminders from the ATO for Small Businesses
Purchase and Keep Records of Tax-Deductible Items
The end of the financial year on 30 June is the last opportunity for small businesses to purchase tax-deductible items they intend to claim for the financial year. It’s crucial to document these purchases accurately, including their cost and usage. This is particularly important for items that have both work and private use, as proper apportionment is necessary.
PRO TIP: Keeping detailed records of tax-deductible purchases is essential. It not only helps in claiming the correct deductions but also ensures compliance during ATO audits.
Check Small Business Concessions
Small businesses can access a range of concessions based on their aggregated turnover. These concessions apply to various business structures, including sole traders, partnerships, companies, and trusts. Some of the key concessions include:
– CGT Concessions: Small businesses may be eligible for capital gains tax (CGT) concessions when they sell active assets.
– Small Business Income Tax Offset: Eligible small businesses can reduce their income tax liability.
– Small Business Restructure Roll-over: This allows businesses to defer CGT when restructuring their business.
PRO TIP: Understanding and utilising small business concessions can significantly reduce your tax liability and improve your business’s financial health.
Finalise STP Records
For small businesses with employees, it’s imperative to finalise Single Touch Payroll (STP) records by 14 July. This ensures that employees have the correct information needed to lodge their income tax returns. Remember, STP information must be finalised for all employees paid in the financial year, including terminated employees.
PRO TIP: Finalising STP records on time not only ensures compliance but also builds trust with your employees by providing them with accurate information for their tax returns.
Check Your PAYG Withholding and Instalments
From 1 July, individual rates and thresholds will change, impacting PAYG withholding for the next financial year. Ensure that you are using the correct PAYG withholding tax tables and that your software is updated to the new withholding rates. Additionally, review your PAYG instalments to ensure you are neither overpaying nor underpaying your tax liabilities.
PRO TIP: Regularly reviewing and adjusting PAYG withholding and instalments can help avoid surprises at tax time and ensure smooth cash flow throughout the year.
Review Record-Keeping Practices
As you look towards the next financial year, take the time to review your record-keeping practices from the past year. Identify any areas that need improvement and implement changes to enhance accuracy and efficiency.
PRO TIP: Effective record-keeping is the backbone of a compliant and efficient tax return process. Regular reviews and improvements can save time and reduce stress at tax time.
Statistics Highlighting the Importance of Compliance
Statistics from the ATO underscore the importance of compliance for small businesses:
– Over 2 million small businesses lodge tax returns annually in Australia.
– Common errors include incorrect claims for deductions, inadequate record-keeping, and late lodgements.
– The ATO conducts thousands of audits each year, with many focusing on small businesses.
These points highlight the need for small business owners to stay informed and diligent in their tax reporting.
Practical Tips for Small Business Owners
Keep Detailed Records
Accurate record-keeping is essential for compliance and maximising deductions. Ensure you:
– Keep receipts and invoices for all business-related purchases.
– Maintain detailed records of business income and expenses.
– Use accounting software to streamline record-keeping and ensure accuracy.
Understand Your Tax Obligations
Stay informed about your tax obligations, including:
– Knowing the tax-deductible items and how to apportion costs for work and private use.
– Understanding the small business concessions available to you.
– Keeping up with changes to PAYG withholding rates and instalments.
Work with a Tax Professional
Consider working with a registered tax agent or accountant to ensure your tax return is accurate and compliant. They can provide expert advice, help you understand your obligations, and maximise your eligible deductions.
PRO TIP: A tax professional can be an invaluable resource, helping you navigate complex tax laws and ensuring you meet all ATO requirements.
Conclusion
Preparing for tax time doesn’t have to be stressful for small business owners. By following the ATO’s reminders and implementing practical steps, you can ensure compliance and maximise your eligible deductions. Keep detailed records, understand your tax obligations, and consider working with a tax professional to navigate the complexities of small business tax returns. Stay informed, stay compliant, and make the most of the available concessions to improve your business’s financial health.
Additional Resources
For more detailed information, visit the ATO website where you can find comprehensive guides on small business tax returns, concessions, and record-keeping practices. Utilise the tools and resources available to ensure your business stays compliant and maximises its tax benefits.