Post-Pandemic Tax Planning Guidelines for 2020
Given the devastating economic consequences of the COVID-19 pandemic, now is the best time for small business owners to craft tax strategies. As times remain uncertain, you don’t want to pay more tax than you’re legally required. With the expertise of a business accountant, you can begin improving your tax position for the remainder of the year—pronto.
By maximising superannuation contributions, you create a healthy financial cushion for future use. If you don’t hit your concessional contributions cap of $25,000 by the end of the financial year, you can claim tax deductions on your return.
Low-balance members with a cap of under $500,000 can carry forward unused concessional contributions on a rolling basis for up to five years. Unused amounts expire after the given five years. As such, you’re entitled to make additional deductible contributions above $25,000 to boost super balance and reduce tax.
If you’re an employer, you can ensure that your business receives a tax deduction by paying your team’s superannuation funds ASAP.
Instant Asset Write-Off
Under an instant asset write-off, businesses can claim eligible deductions for assets from the year of installation. If each asset costs less than the given threshold, whether new or secondhand, companies can employ an instant write-off.
If your business vehicle shuttles less than nine passengers or less than one tonne of load, write-offs become applicable only to a limit of up to $57,581. Businesses cannot claim excess costs under depreciation standards nor apply this write-off to motor vehicles.
As a rule of thumb, business owners should review their debtors, listing any unrecoverable funds before the pandemic as bad debt. Chances are, these debtors won’t be in a better position to pay them off at all.
If your business owns stock, perform a stocktake, appreciating your items according to cost, market value, or the replacement value. These comparisons can make a significant impact on your tax outcomes. From here, your Gold Coast accountant can outline your best tax treatment options.
Depending on the health of your cash flow, you can choose to bring costs forward to reduce your overall tax payables. If you’re making investment income, you can take advantage of interest deductions.
The 12-Month Rule
If your small business has an aggregated turnover of less than $10 million per annum, you can deduct prepaid expenditures under the 12-month rule. This rule also applies to rent, lease payments, insurance, interest, and various business payments. Discuss with your business accountant how to leverage this rule.
As with any tax season, you’ll want to get planning as soon as possible. If you’re not sure where your business is at, reach out to a specialist. Whether essential or non-essential, equipped with a skilled company accountant, your business need not go under.
With New Wave Accounting and Business Advisory, we help scale businesses by getting decision-makers familiar with their tax landscape. If you’re unsure about paying more tax than you should be, our expert accountants provide every client with proactive advice. One of the best Gold Coast accounting firms, your success is our success.