Client Communication

Year End/New Year Bookkeeping Tips

As always there are a lot of things to consider for the end of financial year and starting a new financial year so we have put together some tips below to help.

Top tips to help with end of financial year:

  • Once you have run your last pay run for the financial year reconcile the payroll liability accounts (wages payables, superannuation payable & PAYG withholding payable) and finalise your Single Touch Payroll. This will make reconciling/preparing your WorkCover, Payroll Tax & Taxable Payments Annual Report (if applicable) easier.
  • Review aged debtors & creditors to ensure all amounts being carried forward are recoverable or payable.
  • Reconcile all bank, credit card, loan and petty cash accounts.
  • Perform a stock take if applicable on 30th June to ensure correct stock valuation.

Top things to consider for the new financial year:

  • Superannuation guarantee rate has now changed to 10.5% and the minimum $450 threshold has been removed (most software programs will automatically make these changes but it is best to check when preparing the first pay run).
  • National minimum wage increases as of 1 July 2022 so check to see if staff need rate changed (5.2% if you are not covered by an award and 4.6% if they are covered by an award).
  • Keep in mind Single Touch Payroll Phase 2 will need to be implemented when available by the software provider.

If you have any questions or need help with any of the above, please reach out as we are happy to help.

For more insights, subscribe to our mailing list.

Year End Tax Planning

As we approach the end of the financial year it’s a good time to start thinking about what you could do to minimise your tax liability.

What’s new for 2022?

  • The concessional cap for superannuation contributions has increased from $25,000 to $27,500 for the 2022 financial year. Don’t forget, to claim the deduction, your super fund will need to have received the contribution prior to 30 June and you will need to provide them with a notice of intent to claim a deduction.
  • The ATO has released a Tax Ruling and Taxpayer Alert which outlines their interpretation with regards to key legislative provisions which govern trust distributions amongst family groups. Where this impacts your group, we will be in touch to discuss in more detail.
  • The ATO has also released guidelines which outline where the ATO considers the allocation of profits from professional practices to be low, medium, or high risk. Again, if this impacts your business, we will be in touch to consider how we apply these guidelines to your practice.

Tax Planning Tips & Information

  • The company tax rate for base rate entity companies for the 2022 financial year is 25%.
  • The loss carry-back rules are still available which means eligible companies can claim a refundable tax offset using the new loss carry-back measures when they lodge their 2022 financial year tax returns where tax was payable in the prior year.
  • The various SA COVID-19 grants paid throughout 2022 will be non-assessable income if received so please ensure good records are kept to ensure the correct treatment is applied.
  • Temporary full expensing for asset purchases is available for the 2022 financial year and importantly is available until 30 June 2023 so if you are considering any capital investment in your business, talk to us to ensure you obtain the full benefit of these provisions.
  • Carry-forward unused concessional contributions are available which allow individuals to claim an additional tax deduction if a superannuation contribution is made to use up unused concessional contributions from the 2019, 2020 and 2021 financial years.
  • Capital Gains Tax: If you have made a capital gain during the 2022 financial year, you may consider realising a capital loss (if appropriate) on another asset to offset the capital gain.
  • Cash flow: Vary PAYG instalments for the June 2022 quarter (if appropriate). This is best done in conjunction with an estimate of your 2022 tax position.
  • Home office expenses: You can claim 80 cents per hour for the 2022 financial year where you worked from home. Make sure you have detailed records of the periods you worked from home.
  • Ensure that you retain receipts or substantiation for any expenses you would like to claim.
  • If you travel over 5,000kms in your motor vehicle for work, consider whether you should maintain a log book or whether you need to complete a new one (to be completed every five years). If you are relying on a log book prepared from a previous year you also need to record the odometer reading as at 30 June.
  • Trading stock: Conduct a stocktake at 30 June, write off any obsolete or damaged stock and choose your stock valuation method. You can use cost, market selling value or replacement value, and this can be changed each year. If you are a small business entity and your trading stock value has not moved by more than $5,000 you do not have to do a stocktake.
  • Trust minutes/resolution: Discretionary trusts have to resolve where they would like to distribute their income for the 2022 financial year prior to 30 June 2022. We will prepare trustee resolutions for our clients and will send these out ahead of 30 June.
  • Superannuation (businesses): Pay your super before 30 June in order to get a tax deduction for the 2022 financial year. Super contributions need to have been received by the superannuation fund by 30 June.
  • Prepaid expenses: If your business is a small business entity, you are entitled to a tax deduction where expenses covering a period of up to 12 months are prepaid.
  • Bad debts: Review and write off bad debts to ensure a deduction in 2022 financial year.

Can we give you a hand?

If you would like any further detail on the above, or for an estimate of your tax position for the 2022 financial year, please contact your Holman Hodge advisor.

For more insights, subscribe to our mailing list.

Federal Budget 2022-2023

Cost of living relief but is there anything for small business?

In a surprise to no one, this Federal Budget has a huge focus on the cost of living, and provides relief for individuals and families for this to the tune of $8.6 billion.

Specifically, the announced cost of living relief includes:

  • Fuel excise being cut by 22c per litre for the next six months (starting now),
  • An additional payment of $420 to be paid as part of the Low and Middle Low Income Tax Offset (LMITO) and
  • A one-off $250 payment for those on the pension and some government welfare payments.

It was very much a pre-election budget with the impact of the above announcements to occur either immediately (fuel excise) or before the budget ($250 payment).  The flow of funds from the LMITO changes won’t be available until 2022 tax returns are lodged. It is expected the law will be passed soon.

The Federal Government has had to walk a very delicate balance between providing cost of living relief and trying not to add to the increasingly problematic inflationary pressure building within Australia.  No doubt the Reserve Bank of Australia will be watching closely and considering how future interest rate movements play into the current economic situation.

But was there anything in the budget for small business?

Attracting and retaining skilled staff

We see in our client base that attracting and retaining staff is a significant issue for many businesses. To this end, a “Small business – Skills and training boost” has been announced. Broadly this initiative will allow a 20% additional deduction for eligible training expenditure used to upskill staff.  We need to see further detail on these measures including who can provide the training, and what “eligible expenditure” actually is.

Adoption of digital technologies

There was also a “Small business – Technology investment boost” announced to encourage and support the adoption of digital technologies for small business.  An additional 20% deduction will be provided for eligible expenditure by business, including on depreciable assets, to adopt digital technologies.  There will be an annual expenditure cap of $100,000.

Pending the details around these initiatives we expect that there will be benefits to employers and small businesses.  However, training and upskilling can be expensive and the offsetting cashflow benefit from these initiatives won’t be received until the 2023 income tax return has been lodged.

Anything else?

There are some changes announced as to how PAYG and GST instalments will be calculated, proposed changes to the regulations around employee share scheme reporting which may make offering shares to employees of private companies more attractive, and changes to support employment and retention of new apprentices.

The ATO has received further funding to focus on large private groups and high net wealth individuals so we can expect a continued focus on various review and engagement programs by the ATO.  There are also various reporting changes including single touch payroll data sharing with state revenue authorities, taxable payment reporting, and trust reporting that will transition over the coming 12 -18 months.

What does this mean for the election?

This budget didn’t propose any significant tax policy changes that provides an indication of the position that the Coalition will take to the coming Federal election.  Will the Australian Labor Party put forward some systemic tax changes as part of their campaign?  It seems unlikely after the issues they had at the last election with regards to franking credits and negative gearing.

For more insights, subscribe to our mailing list.

Financial support for South Australians

Just after Christmas, the State Government announced further health restrictions due the impact of the Omicron variant of Covid.  These rules were specifically introduced for businesses in tourism and hospitality and gyms, and focused mainly on density limits.

On 31 December, the State Government announced financial support packages targeted at businesses in the industries impacted by the restrictions.  They also announced a “business hardship grant” which is available to businesses who aren’t in tourism, hospitality, or a gym but have been significantly impacted by Covid restrictions. Further detail is provided below regarding these grants.

There are also many South Australians contracting Covid which means they may be eligible for the Pandemic Leave Disaster Payment which is a Federal Government payment made available to people who are unable to work due to having the virus or having to care for someone with the virus.

There are a number of eligibility criteria for both the business and individual payments.

Support for South Australian businesses

Tourism, hospitality, and gyms

An automatic payment was made to businesses in these industries where they received the previous COVID-19 Tourism and Hospitality Support Grant and gym operators that received Additional COVID-19 Business Support grant.  The amount of the payment made was dependent upon a number of factors but includes:

  • $3,000 for an employing business or $1,000 for a non-employing business
  • An additional $1,000 for businesses located in the CBD
  • An additional $7,000 for tourism and hospitality businesses with turnover above $2 million

These payments were made automatically so if you believe you should have received this payment and haven’t, please let us know.

A second grant for operators in these industries is available where the business can show a 30% downturn in turnover when comparing the turnover for the two weeks from 27 December 2021 to 9 January 2022 to a comparable two-week period (generally the same two-week period in 2019 – 2020).  Where the business can show this drop in turnover, they will receive a second grant at the same value as the automatic grant payment referred to above.

This grant must be applied for via the portal on the SA Treasury website (link below).

If a business did not receive the automatic payment, they can still apply for the second grant if they can demonstrate a 30% decrease in turnover.  Businesses have until 31 March 2022 to apply for this grant.

Business hardship grant

Businesses that are not eligible for the tourism, hospitality and gym grants may still be eligible for the business hardship grant where they can show a 50% downturn in turnover when comparing the turnover for the two weeks from 27 December 2021 to 9 January 2022 to a comparable two-week period (generally the same two-week period in 2019 – 2020).

Eligible businesses will receive $6,000 where they employ staff or $2,000 where they do not employ staff.  This grant must be applied for via the portal on the SA Treasury website.

Other financial support

The State Government has also announced other, very specific, financial relief including:

  • Major Events Support Grant – this is only payable to operators of major one-off events that were impacted by the restrictions
  • Payroll tax relief – tourism, hospitality, gyms, and other eligible businesses that have been impacted by trading restrictions may apply for a payroll tax deferral
  • Liquor licence fee relief – the State Government has provided a waiver of annual liquor licensing fees for 2020-21 for a number of categories

If you believe any of these are relevant to your business, please contact us or refer to the link below for further information.

Important eligibility requirements

To be eligible for the grants, businesses must:

  • Be registered for GST
  • Be located/operating within SA
  • Have a valid ABN
  • Have Australia-wide grouped payroll of less than $10 million in the 2019-20 or 2020-21 financial year

Please go here for further information from SA Government Treasury.

Pandemic Leave Disaster Payment for individuals

The Panic Leave Disaster Payment is overseen by the Federal Government and paid through Services Australia.  This is payable to people who are required to isolate due to a positive PCR or RAT Covid test however, where the result of a RAT is being used, the result must be registered with the relevant health authority to be eligible for the payment. It is also available in some circumstances to carers and people who are close contacts and have been directed to isolate.

There are a number of eligibility requirements to be met to be entitled to this payment.

To determine whether you are eligible for this payment, please go here to work through the criteria for South Australians.

If you have any questions in relation to the above, please contact your Holman Hodge adviser.

For more insights, subscribe to our mailing list.

Are you a director of a company?

If so, you need to apply for a Director Identification Number

The Government has recently passed legislation which requires a director of a company to have a “director identification number” (or Director ID).  This has been introduced to try and stop fraudulent behaviour by directors and in particular involvement in illegal phoenix activities.

This has been proposed for quite some time, with the legislation recently being passed and the timeframes now determined.

You can apply for your Director ID from 1 November 2021 and, if you are a current director, you have until the end of November 2022 to register for it.

There are also changes to director appointments going forward:

  • For directors appointed after 1 November 2021 – you will have 28 days to obtain a DIN
  • From 5 April 2022 a director must have a DIN before they can be appointed

The purpose of this email is to assist those that are currently a director of a company to apply for their DIN.

How do I apply for a director identification number?

You will need to complete a Director ID application on the Australian Business Registry Services (ABRS) website to obtain your Director ID.  Go to Australian Business Registry Services for the details.

To apply online for your DIN you will need to verify your identity using your myGovID – if you haven’t yet set up your myGovID credentials, you will need to do that first.  You will find a link to take you through how to do that on the ABRS link above.

Once you’ve verified your identity using myGovID, you will then be required to provide further proof of identity by providing specific information the ATO already holds about you.  You will need two of the following documents to verify your ATO record:

  • Notice of Assessment details
  • Bank account details
  • PAYG payment summary
  • Superannuation account details
  • Dividend statement
  • Centrelink Payment Summary

Once done, you can complete the application form.

The application form itself is quite simple to follow.  As this digital ID is linked to your ATO record, it means most of your personal details will flow through to the application form.

You should receive you DIN as soon as you lodge the form.

What if you can’t use myGovID?

There is a paper form available for those who are unable to use myGovID.  This manual process will take longer and requires certified copies of identity documents to be provided.  Please contact us if you would like further information in relation to this option.

If you have any questions in relation to the above including setting up your myGovID, or sourcing the details of your ATO records, please contact your Holman Hodge adviser.

For more insights, subscribe to our mailing list.