As tax time approaches, it’s not only a time to think about your tax return but also an opportunity to establish sound business practices for the upcoming financial year.
Successful businesses that fulfil their obligations excel in cash flow management and record-keeping, supported by the right digital tools that enable secure and efficient daily operations. This, in turn, facilitates smooth interactions with the Australian Taxation Office (ATO) when necessary.
Remember, it’s crucial to lodge your business tax return on time, even if you are unable to make the payment promptly. Timely lodgment demonstrates your awareness of your business obligations and your commitment to meeting them. If you anticipate difficulty in paying on time, the ATO may be able to assist you in setting up a suitable payment plan.
Record-keeping
Maintaining complete and accurate records is essential, and knowing which records to keep is equally important. Most records should be retained for a period of five years and stored securely. It’s crucial that records are in English or easily convertible to English. A well-organized record-keeping system simplifies reporting and lodgment processes, ensuring timely compliance.
The ATO provides four key tips for effective record-keeping:
- Detailed records should be kept for payments made to contractors providing services under the Taxable Payment Reporting System (TPRS). These records facilitate the preparation and lodgment of the Taxable Payments Annual Report (TPAR) by 28th August.
- Vehicle logbook records should not be older than five years. If your logbook will exceed this timeframe at the time of tax return lodgment or if your usage pattern has changed, it’s necessary to start a new logbook.
- Determine whether government grants or payments received are taxable and should be reported as business income when lodging your return. This includes payments from the National Disability Insurance Scheme (NDIS) or Childcare Subsidy.
- Keep written evidence, including details and ABN, of any withheld amounts from payments received. Payments may be withheld due to non-quotation of an ABN, subcontracting work through a labor hire firm, or voluntary agreements to withhold tax amounts.
Our KMT tax adviser can provide valuable guidance to ensure your business meets its tax obligations.
Read more: Tips to help nail your record-keeping
If you have late lodgements
The Small Business Failure to Lodge (FTL) Penalty Amnesty Program was introduced on 9th May 2023 as part of the Federal Budget 2023–24. This amnesty program offers your business the opportunity to bring any overdue tax returns, business activity statements (BAS), and FBT returns up to date.
To be eligible for the amnesty, your business must meet the following criteria:
- Have had an aggregated turnover of less than $10 million when the original lodgment was due.
- Have outstanding tax returns, BAS, or FBT returns that were originally due between 1st December 2019 and 28th February 2022.
- Lodge the outstanding statements between 1st June 2023 and 31st December 2023.
If your business qualifies for the amnesty, any FTL penalty associated with the late lodgment will be automatically waived, requiring no further action on your part. However, the general interest charge (GIC) will still apply.
If your business has fallen behind on lodgments, it is essential to get back on track. Keeping your lodgments up to date not only helps you understand your business’s net tax position but also demonstrates your commitment to meeting your obligations, even if you’re facing difficulty in making timely payments. In most cases, your business can set up its own payment plan online, utilizing the ATO’s self-serve payment plan option for debts up to $100,000.
If your business is no longer operational, it is crucial to lodge any outstanding obligations and subsequently cancel your ABN and any tax registrations, such as GST.
If you’re dealing with late lodgments, don’t hesitate to seek assistance from our KMT tax adviser. We can guide you in getting back on track and even liaise with the ATO to find the best possible solution for your situation.
Pre-2010 Employment Agreements
Employers are reminded of changes to registered employment agreements predating 2010, often referred to as “zombie agreements.” These agreements will automatically terminate in December of this year. If you are an employer with such an agreement, it is mandatory to inform your employees in writing about the upcoming changes before 7th June 2023. The Fair Work Commission offers resources on its website to assist in meeting this obligation.
GST and Motor Vehicles
The ATO has published information to help businesses determine whether GST applies to their motor vehicle purchases and sales. For GST purposes, a “motor vehicle” refers to a motor-powered road vehicle. A “car” is specifically defined as a motor vehicle designed to carry a load of less than one tonne and fewer than nine passengers, excluding motorcycles and similar vehicles.
Vehicles primarily used for purposes other than public road use, where road travel is secondary to their main function (e.g., road rollers, graders, tractors, and earthmoving equipment), are not considered “motor vehicles” for GST purposes.
Regarding purchasing a motor vehicle, if it is solely used for business purposes and your business is registered for GST, you can generally claim a credit for the GST included in the vehicle’s price, provided you have a tax invoice. Luxury car purchases, leased vehicles, and second-hand vehicle purchases have specific rules that apply.
When disposing of a motor vehicle, you need to account for GST if the disposal is considered a taxable supply. A “decreasing adjustment” may be available for the business use element of
Contact KMT advisers now for your tax planning advice!
This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek tax advice from a qualified accountant at KMT Partners. Information is current at the date of issue and may change.
