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Flavio has tax questions after another year of COVID. Here’s what he and other business owners should know

Swiss-born restaurateur Flavio Carnevale is amongst Australia’s 2.3 million small business owners getting ready for the tip of the present monetary year.

But after another coronavirus-interrupted year and the introduction of new authorities incentives, he’s not sure about what he owes and can declare this time round.

“It is confusing because it’s like we, and even the accountants, need to learn everything from scratch,” the 44-year-old informed SBS News.

While for the previous year Mr Carnevale’s Italian restaurant Marta in Sydney’s Rushcutters Bay has remained open, he had so as to add a weekend bakery to assist survive the pandemic.

“Without the bakery, I don’t know if we could survive, or be here today,” he stated.

The Australian Tax Office has been listening to from many owner-operators like Flavio in regards to the challenges of the previous 12 months.

“Many are feeling a little anxious, a little fearful, and there are a few different things that small businesses need to think about this year,” stated Deborah Jenkins, the ATO’s deputy commissioner for small business.

SBS News posed some of the commonest questions about this distinctive monetary year to a workforce of consultants, who reply them beneath: 

Why is that this monetary year so complicated?

Trudi Yip, founder of Sydney’s Numeric Eight Bookkeeping, stated that is “probably the most confusing end of financial year [we’ve faced] because there are so many areas impacted”. 

“Because of COVID-19, it’s an interesting year. The government has thrown so many grants and benefits [to small business owners] and … made changes to tax laws,” she stated.

Because of the unstable financial panorama, Ms Yip stated even her firm remains to be utilizing the ATO as a useful resource to seek out out what the adjustments are.

“It is a minefield,” she stated.

Trudi Yip is founder and managing director of Numeric Eight Bookkeeping.

Trudi Yip is founder and managing director of Numeric Eight Bookkeeping.

SBS/Sandra Fulloon

What should I do with my money circulate information?

Mr Carnevale, like many business owners, has managed wild revenue swings over the previous 12 months.  

“Cash flow is definitely one of the main questions this year,” he stated. “During COVID-19 lockdowns everyone panicked, not knowing who would stay open or close and who would survive.”

According to the ATO, every state and sector is reporting wildly completely different points with money circulate. 

Ms Jenkins stated some small companies have seen no change throughout COVID-19, some are doing very well, and others are actually struggling.

“The stop-start nature of the [small business] economy means many are asking: ‘do I even have enough money to pay my taxes this year?’” Ms Jenkins stated.

For this purpose, it’s extra vital than ever for small business owners to supply correct digital cashflow information this year.

“As a small business, if you have made a loss this year, but paid tax last year on profit, you can offset that with the tax you paid last year, therefore giving you a potential refund or offsetting it against any tax liabilities,” stated Lielette Calleja, founder of cloud accounting business All That Counts.

Is JobKeeker taxable?

While the federal government’s wage subsidy scheme ended on 31 March, some employers turned eligible to obtain the JobMaker Hiring Credit for any further workers that began employment on or after 7 October 2020.

The ATO says JobKeeper is assessed as taxable revenue and for that reason must be included in a tax return.

“The whole point of JobKeeper was to keep people employed, and it did its job. It did a wonderful job actually,” Ms Yip stated.

“It can be very confusing because people say: ‘oh, but it was given to us by the government’. But actually, no, it is a taxable item.”

Deborah Jenkins, ATO deputy commissioner, small business.

Deborah Jenkins, ATO deputy commissioner of small business.

SBS/Sandra Fulloon

How a lot can I declare for brand new tools?

The threshold for the Instant Asset Write Off was elevated to $150,000 final year, protecting companies with an aggregated turnover of lower than $500 million.

Mr Carnevale stated he spent $30,000 to suit out his new bakery, together with ovens, machines and mixers. He stated he didn’t know how a lot of that he may declare again.

The ATO’s Ms Jenkins explains: “You don’t get the money back immediately for exactly the amount that you’ve paid. It is a tax deduction.”

Ms Calleja stated now can be an excellent time to purchase new tools in case your business is making a revenue, “especially if that piece of equipment can help you create additional revenue”. 

However, Ms Yip warned: “Spending affects your cashflow, so if you don’t have much money in the bank, don’t spend it unnecessarily.”

Is superannuation altering?

Superannuation adjustments are set to come back into impact within the new monetary year. The assure fee will increase by half a per cent to 10 per cent from 1 July, 2021. 

“Even though COVID-19 is still around, a lot of business owners are confused about whether superannuation is still increasing,” Ms Yip stated.

“But it is going ahead, so ensure you are paying your employees the correct amount.”  

Most cloud accounting software program will likely be prepared by July to implement the adjustments, she stated.

“If you’re not sure of what to do or you’re questioning employee contracts, go back to your accountant or bookkeeper to double-check.”     

Should I be getting particular recommendation this year?

According to Ms Calleja, it is a good suggestion.

“This financial year it is more important than ever to speak with an advisor who can guide you not only from a compliance point of view, but also business strategy – cashflow, budgeting, and forward planning,” she stated.

“Many businesses still don’t work with an advisor, perhaps because they think they’re too small, or that they don’t need help, or they can’t afford it.

“But it is more important than ever to seek professional advice from an accounting advisor due to all the legislative changes during COVID-19.”

Lielette Calleja is the founder of cloud accounting business All That Counts.

Lielette Calleja is the founder of cloud accounting business All That Counts.

SBS/Sandra Fulloon

Resources in additional than 20 languages are additionally obtainable on the ATO website. The tax workplace additionally provides an interpreter service, Ms Jenkins stated.

The ATO’s high suggestions this tax time are:

  1. Get recommendation from a trusted skilled
  2. Keep a watch on cashflow
  3. Maintain good digital information – which should be in English or simply translatable.

“And please be careful of phishing emails or text messages asking you to ‘click on this link’. If you’re uncertain, give us a call or contact your tax agent,” Ms Jenkins stated. 

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