What Small Business Owners Need to Know Before Submitting Their 2019 Tax Return

small business 2019 tax return advice

As a small business owner, you may be aware that there have been several new measures introduced which will affect 2019 tax returns. In light of these recent changes, including an instant asset write-off announced in the new Federal Budget and increased compliance auditing from the ATO, we suggest getting help from a tax agent before submitting your 2019 tax return. The experienced Gold Coast tax accountants at TRAK can help you get your tax return in on time, while only paying the tax you should. 

This month, the team at TRAK Accountants share what small business owners need to know before submitting their 2019 tax returns:

Work Related Expenses Compliance

In the 2018 Federal Budget, the ATO received a $260 million boost in funding to pursue taxpayers who are over-claiming on work related expenses. $130 million was set aside for the funding of debt collectors and prosecuting taxpayers. ATO is using this funding to audit taxpayers regarding work related expense claims, including for laundry, motor vehicle/travel, home office, internet and mobile phone/data plans. Overtime meal claims, union fees and subscriptions are also being targeted for compliance. If you are planning to claim work related expenses in any of these areas, it is essential that you keep accurate tax records and have valid documentation to support your claim. 

Not sure which work related expenses you can claim? This is where a registered tax agent can help! At TRAK Accountants, our taxation services can assist in identifying your work related expenses, and ensure that your claim has the best possible chance of success. If you feel that you don’t have enough experience or expertise to lodge your 2019 tax return, we suggest investing in the services of a professional accountant. To learn more, head to our blog post on 5 things to look for when choosing a tax agent.

Single Touch Payroll & Income Statements

Single Touch Payroll (STP) became mandatory for businesses from July 1st, 2019. The STP is used to report tax and super information to the ATO after each pay day using a paperless digital format called Standard Business Reporting (SBR). If your small business employs more than 20 employees you should already have been using STP, while businesses with 19 or less employees had until the beginning of this month to comply. ‘Micro’ businesses with less than 4 employees have the option of using low or no cost products, or reporting quarterly through a registered tax agent. You can head to the ATO website for more information about Single Touch Payroll and how to use the system.

With the introduction of STP, small businesses are no longer required to require a payment summary to their employees. Payment summaries have been replaced with income statements, which can be accessed via the myGov website or through the ATO. Your employees will receive a notification from the ATO in their myGov inbox when their income statement is ‘Tax ready’, and can then complete their tax return. 

Instant Asset Write-Off

The instant asset write-off threshold has been increased and expanded for small businesses. This means that if your business has a turnover of less than $10 million, you can claim deductions for assets that cost less than $30,000 each, were purchased after May 12th, 2015, and were first installed ready for use or used for a business purpose from April 2nd, 2019 until June 30th, 2020. You are allowed to claim a deduction for multiple assets, provided each asset costs less than the relevant threshold. 

From April 2nd, 2019, the instant asset write-off also includes businesses with a turnover from $10 million to less than $50 million. For assets purchased for $30,000 or above, you must use the general depreciation rules. To be eligible for the asset write-off, you need to be considered a ‘small business entity’. This includes sole traders, companies, partnerships and trusts that operate a business for all or part of the income year, and have an aggregated turnover of less than $10 million. We encourage any Gold Coast based small businesses interested in claiming the instant asset write-off in their 2019 tax returns to contact the friendly staff at TRAK Accountants today.

Lower Company Tax Rate Changes

There have also been changes made to company tax rates. These rates apply to companies, corporate unit trusts and public trading trusts. The full company tax rate of 30% applies to all companies which are not eligible for the lower company tax rate of 27.5%. A company must be considered a ‘base rate entity’ for the 2018-2019 income year to be eligible. Your small business is a base rate entity if your turnover is lower than the turnover threshold of $50 million for the 2018-2019 income year, and if 80% or less of your assessable income is passive income, such as interest, dividends, rent, royalties and net capital gain. The lower company tax rate will be further reduced for base rate entities to 26% in 2020-2021, and to 25% for the 2021-2022 income year. 

Don’t have time to keep up with changes in tax rates? Many small business owners are too busy to deal with time-consuming tasks like bookkeeping, accounting, budgeting, administration and lodging tax returns in 2019. The Gold Coast team of tax accountants and financial experts at TRAK can take these tasks off your hands, allowing you to focus on running your business. Take advantage of our range of taxation services today, and receive ongoing tax help from the professionals. To learn more about the benefits of tax planning for businesses, click here.  

Increased Income Tax Offset

Finally, the small business income tax offset has increased. This offset is worked out on the proportion of tax payable on your business income, and can reduce the tax you pay by up to $1,000 a year. You can claim this offset if you the sole trader of a small business, or have a share of net small business income from a partnership or trust. The business must have an aggregated turnover of less than $5 million for the 2016-2017 income year onwards. The small business income tax offset is due to increase from 8% to 13% in the 2020-2021 income year, and then to 16% in the 2021-2022 income year. Personal services income or salaries, wages and director’s fees are not eligible for this offset. You can confirm your eligibility for the small business income tax offset now on the ATO website.

Let us help you get on TRAK to success! We offer tax help to Gold Coast based residents and small businesses, including Tweed, Robina, Broadbeach & Southport. Our taxation services include income tax returns and amendments, annual tax planning strategies to legally minimise your tax liability, and the completion of compliance forms for sole traders and companies. 

Contact Us to book a complimentary consultation with one of our Gold Coast tax accountants today.

Hopefully you found this blog article useful. Get all our FREE tax accounting and advisory news,
tips and information by subscribing to our monthly newsletter.