Although all businesses aim high at the beginning of their journey, the reality is that only a small proportion of companies will make it to their intended success. Most businesses founded today are destined to become another failure statistic. At the Keys to Success event held by business management service Catapult, Mike Boorn Plener, the Read More…
The 4 tax changes small businesses need to know
Fri 26 July 2019 - 10:35 amSmall Business
It’s the beginning of the new financial year and a raft of tax changes have arrived as of the first of the month – if you run a small businesses, it’s up to you to be across these changes.
On 1 July 2019, a flood of taxes came into play that small businesses need to be aware of.
“Tax law never stands still, and a number of changes that are in place from 1 July 2019 will likely impact how small businesses operate,” said Susan Franks, Senior Tax Advocate, Chartered Accountants Australia and New Zealand (CA ANZ).
“Being aware of these regulatory changes and how they can affect you and your business, may assist in the smooth operation of your business and help you maximise your return.”
The top tax changes you need to be across if you run a small business are:
1.) Single touch payroll
From 1 July 2019 all employers regardless of size are required to report their employee’s tax and superannuation information using single touch payroll (STP). That said, the Australian Taxation Office (ATO) has recognised that small employers may need some additional time to transition to STP and is providing a variety of concessions, including a deferral to 30 September 2019 for those small businesses that request a deferral.
2.) Restrictions on deductions for certain payments of cash wages
To help ensure that businesses compete on a level playing field, those businesses that pay cash wages but don’t report these payments or don’t remit the tax associated with these cash wages, will no longer be able to claim a tax deduction for the cash wages paid after 1 July 2019.
3.) Instant asset write off
The $30K instant asset write-off from the Federal Budget allows businesses to claim immediate deductions for asset purchases up to the value of $30K but only up to 30 June 2020. Consider what depreciating assets your business needs and ensure that they are acquired and installed ready for use before this concession expires.
4.) Reduced company tax rate for active small businesses
That company tax rate for active small businesses will decrease from 27.5% to 26% in the 2020/21 year and to 25% in the 2021/22 year. Along with the decreased tax rates there will be decreased franking rates. It is time to consider the impact of these changes on your small business’s ability to access existing franking credits through future dividend payments.
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