The small business $20,000 instant asset write-off extended… time to go shopping!
The small business write-off threshold of $20,000 has been extended to 30 June 2018 and is available to all small businesses with an aggregated turnover of less than $10 million. After 30 June this year, the threshold will reduce to $1,000.
If you have upcoming business expenses, now might be a good time to do some shopping so that you can claim the deduction in the current financial year!
The $20,000 instant asset write-off explained
If you buy an asset to use for business purposes and it costs less than $20,000, you can immediately deduct the business portion of the cost in your tax return. This deduction is used for each asset that costs less than $20,000. You would then claim the deduction through your tax return, in the year the asset was first used or installed ready for use.
It is important to note that the cost of an asset includes both the amount you paid for it and any additional amounts you spent on transporting and installing it.
What assets are included?
Tip! You may be able to claim a deduction for business website costs using the simplified depreciation rules. Speak to us to find out more.
What assets are excluded?
Capital works used to produce income, including buildings and structural improvements, are written off over a longer period than other depreciating assets. Speak to us to find out more.
You buy a new computer for $6,800 that you use 80% of the time for business purposes and 20% of the time for personal purposes.
You also buy a second-hand printer for $700 which you use 100% of the time for business purposes.
For the computer, you would calculate your instant asset write-off as 80% (the business use proportion) of $6,800, so you would claim $5,440.
For the printer, you would claim the entire cost of $700.
Are you registered for GST?
The threshold amount of $20,000 assumes that you are not registered for GST.
If you are registered for GST, you exclude the GST amount you paid on the asset when you calculate your depreciation amounts (and your instant asset write-off threshold is $20,000 exclusive of any GST).
If you are not registered for GST, you include the GST amount you paid on the asset in your depreciation calculations (and your instant asset write-off threshold is $20,000 inclusive of any GST).
Tip!For further information about GST impacts, speak to us.
Changes are coming to GST from 1 July 2018: is your business ready?
From 1 July 2018, Australian GST will apply to sales of low value goods (AUD $1,000 or less) that are imported by consumers into Australia.
Simply put, these GST changes mean that:
The existing processes to collect GST on imports above $1,000 at the border are unchanged.
If your business meets the $75,000 registration turnover threshold, you will need to act now to review your business systems to ensure that you are compliant from 1 July this year. You will also need to:
Why the GST reform?
The Government’s intention is to ensure that Australian businesses, particularly small retailers, are not unfairly disadvantaged by the current GST exemption that applies to imports of low value goods. The new GST laws ensure that low value goods imported by consumers in Australia are treated in the same manner as goods that are sourced domestically.
Which businesses are affected?
Sales of low value imported goods to Australian GST-registered businesses
GST only applies to sales of low value imported goods to consumers in Australia. Your customer is not a consumer if they are a GST-registered business who purchases the goods for use in their business in Australia.
If your business is the recipient of low value goods, you should notify suppliers of your GST registration to ensure you are not being charged GST twice.
Note! Your business systems will need to be able to determine whether the sales are made to consumers in Australia or to businesses that are registered for Australian GST.
To do! If you are affected by these changes, speak to us to discuss process strategies and options to manage the impact of these new obligations on your business.
How to make your GST reporting easier
If you are a small business with a GST turnover of less than $10 million, Simpler BAS is now your GST reporting method. This means you only need to report total sales, GST on sales and GST on purchases, which will save you time and money.
If you use accounting software, you can keep your original detailed GST classifications, or choose the Simpler BAS bookkeeping settings with reduced codes. It is completely optional and the choice is yours.
Paper BAS forms have not changed, just leave the sections blank where information is no longer needed.
Note! The ATO has developed a Simpler BAS GST bookkeeping guide. This helps with the classification of sales and purchases, and explains common and also misunderstood GST transactions. You can find the guide on the ATO small business newsroom website.
Did you know that some fresh foods are subject to GST?
Some fresh foods, including salads, sushi and cooked pasta with sauce may be subject to GST.
Are you a GST-registered food business?
If you operate a GST-registered food business, you will need to include GST where your food is:
‘Food marketed as a prepared meal’
You need to weigh up a number of factors to work out if your food is ‘food marketed as a prepared meal’. Ask these questions:
5 simplified accounting methods for food retailers
Five simplified accounting methods (SAMs) have been designed for food retailers who buy and sell a mixture of products, where some are taxable and some are GST-free.
You use a SAM to estimate your GST at the end of each tax period.
Do you provide cars, holidays or club membership to your employees?
Rewarding your employees beyond their usual salaries is a great way to show your appreciation for a job well done.
If you do provide your employees with benefits or lifestyle assets to use for their personal enjoyment, it is important to remember that these benefits and assets may have fringe benefit tax (FBT) implications for your business.
Ensure you are meeting your FBT obligations by keeping accurate records to determine any related income tax deductions you may be able to claim.
The FBT year runs from 1 April to 31 March.
What is FBT?
Types of fringe benefits
Private use of exempt motor vehicles for FBT
If a car you own or lease is made available for the private use of your employee, you may be providing a car fringe benefit. There are some circumstances where use of the car may be exempt from FBT.
Tip! Speak to us regarding FBT car-related exemptions where you make an eligible vehicle available to your employee for their minimal private use. ■
Superannuation: what employers need to know
Superannuation is money you pay for your workers to provide for their retirement.
Generally, if you pay an employee $450 or more before tax in a calendar month, you have to pay super on top of their wages. The minimum you must pay is called the super guarantee (SG).
The SG is 9.5% of an employee’s ordinary time earnings.
Note! SG payments are due on 28 January 2018. Make sure you pay the SG on time to avoid paying the SG charge!
Employer super quick check
Here’s how to run a quick check of your super obligations to make sure you have everything sorted.
Are you thinking of changing from sole trader to a company?
As your business develops you may need to adapt to changing needs. One common change is moving from a sole trader to a company business structure.
Company vs sole trader: what’s the difference?
Understanding the key differences between these two structures is important as it can affect how you run your business.
Tip! Speak to your us to discuss your options and tax obligations.
A list of did-you-knows…
Tip! The ASIC website provides a wealth of information about changing your business structure and what your responsibilities and potential liabilities might be.
Hiring new employees? TFN declaration forms can be downloaded
There is a lot of paperwork to complete when you hire new employees. The good news is: you no longer need to order the form and wait for it to be mailed to you.
The ATO has developed a fillable TFN declaration form which is available on their website. You can download it from ato.gov.au/TFNdec or even better, ask your new employee to download the form and fill it in on the screen.
Once it is filled in, print it off, get your employee’s signature then send the original copy to the ATO using the address on the form within 14 days.
Tip! Don’t forget to keep a copy for your files!
Key tax dates
21 February 2018
January monthly BAS due
28 February 2018
• December quarterly BAS due
• December quarter SG charge statement due
• December quarter PAYG instalment due
21 March 2018
February monthly BAS due
23 April 2018
March monthly BAS due
30 April 2018
• March quarterly BAS due
• March quarter SG due
• March quarter PAYG due
21 May 2018
2018 FBT return due
April monthly BAS due
28 May 2018
March quarter SG charge statement due
TaxWise® News is distributed by professional tax practitioners to provide information of general interest to their clients. The content of this newsletter does not constitute specific advice. Readers are encouraged to consult their tax adviser for advice on specific matters.