Tax Time 2023 for Business

Tax Time 2023 – In Business

Know your important dates

  1. 30 June Super guarantee contributions must be paid by this date to qualify for a tax deduction in the 2022–2023 financial year.
  2. 14 July Submit finalised STP Report (if you pay employees)
  3. 28 July Lodge your Q4 BAS
  4. 29 August TPAR Businesses and government entities who make payments to contractors may need to report these payments and lodge a Taxable payments annual report (TPAR). Contractors can include subcontractors, consultants and independent contractors. They can operate as sole traders (individuals), companies, partnerships or trusts. A TPAR must be lodged by 28 August each year
  5. 28 October Lodge Q1 BAS
  6. 28 February Lodge Q2 BAS
  7. 28 April Lodge Q3 BAS
  8. Monthly due dates are the 21st of every month for the prior month.

 

Small Business Measures

Temporary Full Expensing, whereby eligible business were able to claim 100% of the cost of eligible assets will come to an end 30 June 2023.

 

$20,000 instant asset write-off

From 1 July 2023 until 30 June 2024, the Government will temporarily increase the instant asset write-off threshold from $1,000 to $20,000.

Small businesses with aggregated annual turnover of less than $10 million will be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2024. The $20,000 threshold will apply on a per-asset basis, so small businesses can instantly write off multiple assets.

Asses valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year thereafter.

The provision that prevents small businesses from re-entering the simplified depreciation regime for five years if they opt-out will continue to be suspended until 30 June 2024.

 

SME Tax Boosts

On 29 March 2022, as part of its 2022/23 Federal Budget, the Government announced two incentive ‘Boosts’, being:

  • the Technology Investment Boost to support digital adoption by small businesses; and
  • the Skills and Training Boost to support small businesses to train and upskill their

 

These Boosts will allow small or medium businesses with an aggregated annual turnover of less than $50 million to deduct an additional 20% of eligible expenditure (i.e., over and above their usual income tax deductions). For example, an eligible small business would, broadly, be entitled to claim a $120 deduction with respect to $100 of eligible expenditure.

At the time of writing, the Bill had yet to pass the Senate, as it was awaiting the Senate Economics Legislation Committee’s report.

The Technology Investment Boost provides small or medium businesses access to a bonus 20% deduction for eligible expenditure incurred on expenses and depreciating assets for their digital operations or digitising their operations. This Boost applies for expenditure incurred between 29 March 2022 to 30 June 2023.

The value of the Technology Investment Boost is capped at 20% of the total eligible expenditure of up to $100,000 incurred in an applicable income year (or specified time period).

Digital enabling items

  • Computer hardware and equipment
  • Telecommunications hardware and equipment
  • Software
  • Internet costs
  • Digital media and marketing
  • E-commerce
  • Cyber security

 

The Skills and Training Boost provides ‘small or medium businesses’ with a bonus 20% deduction for eligible expenditure incurred on external training for employees. This Boost applies for expenditure incurred between 29 March 2022 and 30 June 2024.

The following broad conditions must be satisfied for expenditure to be ‘eligible expenditure’ for the purpose of the Skills and Training Boost:

  • The employer must be a small or medium business for the income year in which the expenditure is incurred.
  • The expenditure must be incurred within the specified time period
  • The expenditure must be for the external training of employees
  • The training expenditure must be fully deductible for the employer
  • The training must be provided by a registered training provider
  • The expenditure must be charged to the employer by the registered training provider

 

Temporary Loss Carry-back Extension

In the prior year (2020/21) Federal Budget, the Government announced amendments to introduce a temporary loss carry-back measure. Broadly, this initial measure allowed ‘corporate tax entities’ with an aggregated turnover of less than $5 billion to carry-back tax losses made in 2020, 2022, and/or 2023 income years to claim a refund of tax paid (by way of a tax offset) in relation to 2019, 2020 and/or 2022 income years. The rules relating to the temporary loss carry-back regime have been enacted and are contained in Division 160 of the ITAA 1997.

In the 2021/22 Federal Budget, the Government has announced that the loss carry-back measure will be extended to allow eligible companies (i.e., with an aggregated turnover of less than $5 billion) to also carry back (utilise) tax losses from the 2023 income year to offset previously taxed profits as far back as the 2019 income year when they lodge their tax return for the 2023 income year.

 

Business Tax Rates and Concession

A 25% company tax rate for small businesses applies for 2022/2023 for those with an aggregated business turnover of less than $50 million.

The 13% small business income tax offset (up to $1000) is available to businesses with a turnover of less than $5 million. It applies only to business income for sole traders, or a share of business income from partnerships or trusts.

 

Taxable Payments Reporting System (‘TPRS’)

The TPRS is a transparency measure that requires businesses operating within prescribed ‘high-risk’ industries to report payments made to certain contractors to the ATO. The purpose of these requirements is to target the cash economy and general low compliance within a particular industry.

Since 1 July 2012 businesses in the building and construction industry have been required to report total payments made to each contractor for building and construction services each year. From 1 July 2018, it was expanded to the cleaning and courier industries. Then from 1 July 2019 the TPRS was extended to the following industries:

  • Road freight services
  • Information technology services
  • Security, investigation, or surveillance services

Information to be reported in the Taxable Payments Annual Report for each contractor

  • The Contractor’s ABN
  • The Contractor’s name and address
  • The gross amount paid to the contractor for the income year (including any GST)

 

Superannuation Guarantee Contributions (SGC)

Super Guarantee Changes

From 1 July 2023, employees can be eligible for a super guarantee (SG), regardless of how much they earn. This is because the $450 per month eligibility threshold for when SG is paid is being removed. However, employers need only pay super for workers under 18 when they work more than 30 hours in a week. The ATO also reminded employers that the SG rate will also increase from 10.5% to 11% on 1 July 2023. As a result, employers will need to use the new rate to calculate super on payments made to employees on or after 1 July, even if some or all the pay period is for work done before 1 July.

 

Ongoing Super Guarantee rate increase

The SG rate increases to 11% on 1 July 2023, and then continues to increase until it reaches 12% on 1 July 2025.

Date SG Rate
1 July 2023 11%
1 July 2024 11.5%
1 July 2025 12%
1 July 2026 12%

For more information on the superannuation guarantee click here for a detailed list.

Contributions must be paid quarterly. However, you can also choose to pay monthly or fortnightly.

 

Superannuation Guarantee Contribution Payment Due Dates

Superannuation guarantee contributions are payable to an employee’s superannuation fund by the 28th of the month following the quarter-end date, i.e., payment is due by 28 October for the quarter ended 30 September. Contributions for the June quarter must be received by the employee’s fund by 30 June for those contributions to be deductible to the employer in the current financial year.

 

Fringe Benefits – Motor Vehicles

The Fringe Benefits year runs from 1st April to 31st March and a benefit most commonly arises when a car that is owned or leased by a company or trust is made available for private use. You can calculate the taxable value of a car fringe benefit using either of the following methods:

  • Statutory formula method – A single statutory rate of 20% applies, regardless of kilometres travelled, to all new car fringe benefits after 7.30 pm AEST on 10 May 2011. The taxable value of the car fringe benefit is the statutory rate multiplied by the car’s base value. Some older vehicles may still be subject to the progressive statutory rates based on kilometres travelled.
  • Operating cost method – the taxable value of the car fringe benefit is a percentage of the total costs of running the car during the fringe benefits tax (FBT) year. The percentage varies with the extent of actual private use. A logbook must be kept for 12 consecutive weeks every 5 years. The private use percentage is applied to the total operating costs.

 

Electric cars exemption

From 1 July 2022 employers do not pay FBT on eligible electric cars and associated car expenses.

Eligibility

You do not pay FBT if you provide private use of an electric car that meets all the following conditions:

  • the car is a zero or low emissions vehicle
  • the first time the car is both held and usedis on or after 1 July 2022
  • the car is used by a current employee or their associates (such as family members)
  • luxury car tax(LCT) has never been payable on the importation or sale of the car.

 

Benefits provided under a salary packaging arrangement are included in the exemption.

The government will complete a review into this exemption by mid-2027 to consider electric car take-up.

 

Company Loans

Any loan from a company to a shareholder or associate (a related person or entity) which is still unpaid at the end of the financial year is usually treated as an assessable unfranked dividend to the shareholder unless the loan is made under a written loan agreement. A complying loan is either:

  • an unsecured loan to be repaid within 7 years at a benchmark interest rate (minimum); or
  • a loan fully secured by a real property mortgage of 25 years or less with a minimum benchmark interest rate

 

There is considerable time and cost involved in managing such loans which must be considered before borrowing funds from a company.

 

Director Identification Number (DIN)

Now you have your DIN what do you do with it? Keep it safe. Treat it like you would your TFN. Nobody should request it from you unless they are your ASIC agent or a Government body.

Manage your director ID

Once you have your director ID, you can view, update and manage your details online at www.abrs.gov.au. It is important that you update any changes to your personal details.

View or update your details via the ABRS

If you have a myGovID with at least a Standard identity strength, you can log in to ABRS online External link.

Once you log in, you can view your director ID or update your details anytime. You can:

  • check your director ID number and status, including when it was issued
  • view things to do, actions in progress and past activity
  • edit your profile preferences and some of your personal details.

If you don’t have a myGovID, and you want to find your director ID number or update your details, contact the ABRS.

 

Update your details of your company with us

Corporations Act directors

If your personal details change, you must notify us within seven (7) days. Details may include your name, role or address.

The company officeholders’ details must be updated with ASIC. We need to do this within 28 days to avoid late fees. Please email any changes directly to us at [email protected]

 

Business Name Renewal

Often, we get enquiries from clients about Business Name Renewals. Many third-party companies obtain lists of business names and their renewal dates. Some examples are:

  • Registration Pty Ltd
  • Registry Australia Pty Ltd
  • Online Business Registration

 

Unless you receive your business name renewal direct from ASIC, often by email, then these renewals are just marketing that will ask for a fee to do the renewal process for you. The renewal from ASIC is quick and easy and will simply be a BPAY option to pay for the required renewal period. If unsure at any time, call our office for clarification.

 

A few things you need to know…

Client Portal

With the ever increasing risk of identity fraud, Wilson Colman is always looking for ways to improve our security. Having an encrypted online client portal means as a practice we can stay compliant with data security breach laws and provide our clients with an efficient document-sharing tool. The establishment and use of the client portal is an ongoing process.

 

Digital Signing

Where possible we will endeavour to opt for digital signing straight to your email. This will allow signing also on your mobile phone.

Digital signing offers numerous advantages that make it an essential tool in today’s digital age. Firstly, it ensures the integrity and authenticity of electronic documents, providing a reliable method to verify their origin and detect any tampering or unauthorized modifications. This bolsters trust and eliminates the need for physical signatures, saving time and resources. Additionally, digital signing enhances security by using cryptographic techniques to protect sensitive information, safeguarding against fraud and unauthorized access. It also streamlines workflows by eliminating the need for printing, scanning, and physically transporting documents, enabling efficient and eco-friendly operations. With its convenience, reliability, and heightened security, digital signing revolutionizes how we handle important documents, facilitating seamless transactions and collaborations in an increasingly interconnected world.

 

ATO Warning re TFN and ABN Scams

The ATO is urging taxpayers to be vigilant following an increase in reports of fake websites offering TFNs and ABNs for a fee. The ATO states that the fake TFN and ABN services are often advertised on social media platforms like Facebook, Twitter, and Instagram – together with an offer to obtain a TFN or ABN for a fee. But instead of delivering this service, the scammer uses these fraudulent websites to steal both money and personal information.

 

Cloud Accounting

We can help with setting up your cloud-based accounting software. The programs we use and recommend are QuickBooks, MYOB, and Xero. Call us today for subscription costs. We are QuickBooks Certified Advisors and MYOB GOLD Partners. We can also offer online bank feeds of your bank statements directly into our software program without a third party program should you wish to move away from manual bank statements and record-keeping at any time.

 

MyGov and your Notice of Assessment

If you have ticked the box in MyGov to receive ALL ATO information, please be aware that your Notice of Assessment will go directly to your MyGov account and you will be notified of recent activity via your chosen method, i.e., email or text message. A paper copy will not be sent to you by Wilson Colman. Please keep your details up to date in MyGov. You can untick this choice if you would prefer we receive your ATO correspondence.

 

Our Credit Policy

Our terms for payment are 14 days from the date of the invoice. Payment can be made by direct bank transfer, cash, EFTPOS, credit card, and cheque. When paying by direct bank transfer please use your client code as a reference so we can find your payment. Your client code is on your tax invoice.

 

Have you changed your details?

Have you changed your address, telephone number, or email address? Then we need to know. Please make sure you call our office or email us whenever your circumstances change and keep your details up to date.

If you have an ABN and your details have changed, you must notify our office within 28 days so that we can update the Australian Business Register on your behalf.

 

Do you have a Will?

By making a Will you are exercising your legal right of directing how your assets should be distributed. Only by having a Will can you be certain this will happen. When you make your own Will you also choose your executors who will manage your estate after you die. By choosing your executors carefully you can ensure that those responsible for distributing your estate understand your needs and wishes and those of your family.

Without a Will, Statute Law will dictate how your assets are divided. This could produce a result that may mean hardship to your family and be contrary to your wishes. We suggest you ensure you have a Will, and it is up to date.

 

Your Privacy

Many Australians have lost millions of dollars due to tax-related scams, especially email scams and telephone calls. These can result in identity theft. Our privacy policy is in place to ensure that we continue to protect you and your personal information.

Please take time to view our website.  We offer other services from starting up a business, running a business, and bookkeeping services, to assisting you with your retirement needs.

 

DISCLAIMER: This information on this website is not advice. Clients should not act solely based on the material contained in this post. Items listed are general comments only and do not constitute or convey advice. Also, changes in legislation may occur quickly. We, therefore, recommend that our formal advice be sought before acting in any of the areas.