The end of the financial year is looming and there’s a good chance that this year’s EOFY processes are doing to be a bit, different, to previous years.
Whether you’ve spent time working from home, are looking down the barrel of a largely reduced income, or are eyeing up some EOFY sales, there are some things you can do to get your business ready for tax time.
Tax breaks for working from home
If you spent your lockdown time working from home, the you need to be aware of the ‘tax shortcut’ that the Australian Taxation Office (ATO) has introduced. The ATO will allow individuals to claim a rate of 80 cents per hour for running expenses incurred while working from home, instead of needing to calculate costs for specific running expenses.
The ATO is also removing the requirement to have a dedicated ‘work from home area’ in your premises to make claims, and said multiple people living in the same home can all make individual claims using the 80-cents-per hour rate.
Assistant Tax Commissioner Karen Foat said the new arrangement is designed for those who may be working remotely for the first time.
“If you choose to use this shortcut method, all you need to do is keep a record of the hours you worked from home as evidence of your claim,” she said in a statement.
Check your income
Every tax time, salon owners must make the decision about how much they plan to pay themselves. And while this can usually be pretty straight forward, if you’re a sole trader and have been receiving a JobKeeper payment, this will need to be factored in. In addition, you’ll need to ensure you’ve set aside the appropriate tax for this. “You need to obviously make sure you pay your wage, but you also need to set aside the right amount of tax and include that on your June Business Activity Statement, and your PAYG Payment ledger,” says tax agent Joseph Jenson.
Reconsider the EOFY sales
We know, there are some amazing deals around, and that combined with the expanded instant asset write-off, it makes sense to get the equipment you need while the pieces are slashed, right? Maybe.
According to Joseph, spending large amounts at this time of year, and after the low-income period of lockdown, can lead to cash-flow issues. “Rather than spend unnecessarily in areas that won’t bring increased efficiency or generate extra revenue, maybe considering topping up your super contributions,” Joseph says.
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