7 tips for maximising your EOFY tax return
Keen to maximise your tax return this End of Financial Year? Learn which deductions to claim, when to file and what to do about JobKeeper to get the most out of your tax return EOFY 2020.
It’s that time of the year again: tax time. And while it might seem a little more complicated than usual this time around, it's not all bad news. Understanding the information you need and what’s changed to benefit businesses, can help maximise your tax return.
Working from home has become the new norm in many industries. That’s why the ATO has introduced a temporary shortcut method to simplify how you calculate deductions. This means you can now claim 80 cents per hour you have worked from home hour between 1 March and 30 June. The shortcut covers all deductible expenses, and it’s important to keep a traceable record of your hours in a diary or timesheet.
Did you purchase assets like computers, equipment and vehicles for your business that were installed ready for use between 12 March and 31 December 2020? If so, you take advantage of the $150,000 instant asset write-off threshold, which was raised from $30,000 as a result of the COVID-19 pandemic.
JobKeeper is helping many businesses to stay afloat right now, so keeping up with government reporting requirements is crucial. When it comes to tax returns, you can treat any JobKeeper payments you’ve made like normal wages. This means, you’ll need to report JobKeeper payments as part of your business income, so there’s no need to include it as assessable income in your individual tax return. The same counts for sole traders.
Planning and preparation is one of the most effective ways to manage tasks at tax time and maximise your tax return. When are tax returns due? Sole traders must lodge a tax return by 31 October 2020, companies have until 15 January 2021.
This year, there’s extra incentive to lodge on time: you could be eligible for a bigger refund. If COVID-19 has meant you’ve worked fewer hours in the last few months or spent more time working from home, the ATO might refund you more than you initially bargained for.
As a business owner or sole trader, you have the opportunity to defer your annual super contributions, or any unused cap space, to the next financial year. This will increase your concessional contributions cap for the following financial year and can help free up cash you may be able to feed back into your business to encourage growth.
Keen to get your tax refund early to aid cash flow or defer money owed? Talk to the ATO about deferring your payments. Due to COVID-19, you can now request a payment deferral of up to 6 months. Alternatively, you may be able to request early access to funds the ATO owes you.
In a statement, Chris Jordan, Commissioner of Taxation at the ATO, underlines the importance of reducing pressure on Aussie businesses at the end of this financial year. “In these difficult and uncertain times, the ATO is doing everything it can to reduce stress from tax [and] related obligations.”
Tax time can be complicated at the best of times, let alone in the middle of a global pandemic when rules and regulations continue to change. If you’ve been hesitant in the past about using an accountant, or only engaged someone to help with the bare basics, this year might be an ideal time to seek professional help.
An accountant can help you navigate the nitty-gritty of the tax system, easing confusion while perhaps reducing the tax burden or help you increasing refund. And just like in previous years you’ll be able to claim their services as a tax deduction.
Maximising your tax return can help to give your business a much-needed boost. And the best bit is the process isn’t as laborious as you might imagine.
This article is a general overview and should be used as a guide only. We recommend that you seek independent professional advice about your specific circumstances before acting.