Tax Time

To support businesses to meet their Tax obligations, the Australian Taxation Office offers a range of tools and services to make it easier for you to get your tax and superannuation right.

The ATO wants to help you manage and grow your business and get back on track if you need to and also recommends that you speak with your registered tax or BAS agent for help.

One key resource is the Small business tax time toolkit

The 2023 Toolkit will be released shortly, and has a range of fact sheets to help you with:

• home-based business expenses

• motor vehicle expenses

1. Temporary full expensing

Under temporary full expensing, eligible businesses can deduct the business portion of the cost of eligible depreciating assets first held and used, or installed ready for use between 7:30 pm (AEDT) on 6 October 2020 until 30 June 2023.

You can use the temporary full expensing tax return label guide to help identify which labels you will need to complete in your tax return. This will ensure you correctly claim or opt out of the temporary full expensing measure. A loss from using temporary full expensing does not mean you can defer a non-commercial loss.

• travel expenses

• claiming deductions for the cost of digital expenses

• using business money and assets

• pausing or permanently closing your business.

You will be able to find this guide on their Supporting your small business page https://www.ato.gov.au/Business/Bus/ Supporting-your-small-business/

Below we’ve picked out three items to discuss further:

1. Depreciation - temporary full expensing

2. What are Expenses?

3. Tax amnesty for overdue returns December 1, 2019 –February 28, 2022

2. Tax Time tips - What are tax deductions?

Tax deductions allow you to lower the total amount of your taxable income by offsetting it with any necessary out-ofpocket expenses you have made during the financial year. The idea is that you may be able to claim enough deductions to reduce your taxable income, hence securing a bigger tax refund.

However, this doesn’t work for all expenses. The criteria for tax deductions are as follows:

• The expense must be directly related to your work or income-generating activity

• You can not have had the expense already reimbursed by your employer

• You will need the correct receipt or bank statement as evidence. But for expenses which fall into a greyarea category, like home internet which is used for both personal and work-fromhome purposes, you’ll need to work out how much of that expense relates to your income-generating activity.

Contact your local tax agent or accountant for advice on how to get the best return.

3. Tax Update – Small Businesses granted Tax Amnesty

The Australian Taxation Office (ATO) is encouraging small businesses that have overdue income tax returns, fringe benefits tax returns or business activity statements to take advantage of a new amnesty to get their lodgments back on track.

The amnesty was announced in the 202324 Budget. It applies to tax obligations that were originally due between 1 December 2019 and 28 February 2022 and runs from 1 June 2023 to 31 December 2023.

To be eligible for the amnesty, the small business must be an entity with an aggregated turnover of less than $10 million at the time the original lodgment was due.

During this time, eligible small businesses can lodge their eligible overdue forms and the ATO will then proactively remit any associated failure to lodge (FTL) penalties.

When forms are lodged with the ATO under the amnesty, businesses or their tax professionals will not need to separately request a remission of FTL penalties. The ATO encourage all businesses to lodge any overdue forms even if they are outside the eligibility period. Whilst forms outside the amnesty eligibility criteria will attract FTL penalties, the ATO will consider your circumstances and may remit such penalties on a case-by-case basis.

The ATO offers a range of support options, including payment plans. Many small businesses are also able to set up their own payment plan online.

The amnesty applies to income tax returns, business activity statements, and fringe benefits tax returns. It does not apply to superannuation obligations and excludes other administrative penalties such as penalties associated with the Taxable Payments Reporting System.