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This guide explains where you need to begin and what you need to know at tax time for small businesses as well as some tips to get more money back. It will also explain what you can expect from the government in terms of tax refunds and waivers in response to the COVID-19 outbreak.
Please note that this guide will give you a general understanding of what to expect in regard to your taxes and what changes to anticipate as a result of the government's response to COVID-19. However, for more in-depth information it will link you to other relevant guides.
You pay taxes through business activity statements (BAS). When you register for an Australian business number and have registered for GST, you will automatically receive a BAS form when it's time to lodge.
Simply complete the form and send it to the ATO.
If your annual income is under $75,000, then you do not have to register for GST, but you might want to do so anyway in order to claim GST credits.
Some small businesses will also have income tax obligations where they pay a percentage of income in addition to the GST and other things on the BAS. Your obligations here will depend on the company structure and whether you are a sole trader or actually own a company.
In summary:
On 22 March 2020, the Australian government announced a $66 billion stimulus package to support the Australian economy through the COVID-19 outbreak. This is in addition to the $17.6 billion package announced on 12 March.
This package will benefit up to 700,000 Australian businesses with an annual turnover of less than $50 million that employ staff. These tax-free "cash flow boosts" are available from $20,000 to $100,000 and are to be issued to eligible businesses when they lodge their BAS. These consist of initial cash flow boosts and additional cash flow boosts. The amount your business will qualify for in each set of cash flow boosts will depend on the amount of tax your business pays on employee wages. Eligible businesses will receive a credit equal to 100% the amount of tax withheld on employees' wages up to a maximum of $50,000 each time.
The initial cash flow boosts will be issued in two or four instalments (as per whether your business pays tax quarterly or monthly). The total of this 2–4 instalment grant will be a minimum of $10,000 and a maximum of $50,000 per business. Eligible businesses will receive these cash flow boosts from the upcoming BAS due date: 28 April 2020.
Eligible businesses that received the initial cash flow boosts will receive additional cash flow boosts for the periods June to September 2020. These boosts will be equal to the total amount of initial cash flow boosts received by said businesses and will also be delivered in either two or four instalments. Again, this will depend on the business's reporting period.
The instant asset tax write-off has been raised dramatically as a response to the COVID-19 outbreak. The write-off, raised to $30,000 as of 2 April 2019 has now been raised to $150,000 in response to the pandemic. This means that businesses can instantly write off any single asset purchased from 12 March to 30 June 2020 instantly in their next tax return up to the amount of $150,000. This also applies to multiple assets purchased, as long as each individual asset costs under $150,000.
Generally, there are two different options:
You enter the information on your BAS and back it up with evidence in the form of tax invoices from your suppliers. These invoices should include the following information:
If your business is struggling as a result of the COVID-19 outbreak, there's a chance that the tax breaks and refunds may not be sufficient to keep your business afloat during this time. If you think that may be the case, there are alternative options you can explore.
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