Tax Time 2020 – A different approach

The COVID-19 cloud is still upon us which makes tax time this year unlike any other. 

Victorian government guidelines recommend our office door remain closed at this time, therefore we cannot schedule face to face appointments, but we are still in the office working.

When you wish to begin your 2019/20 year tax work, simply PHONE or EMAIL our office and we will get this underway for you. Your documentation can still be delivered to our office by post, or physically delivered during office hours by ringing the doorbell on Hume Street, or simply scan and email to us your records/claims.

The last three months has presented many challenges to our firm and we are very proud to advise that we have now proactively assisted more than 100 of our business clients to gain access to the various COVID-19 assistance packages and resources.  While being very challenging for us (with a ridiculous amount of change and advice provided in such a short space of time), it has been quite gratifying for us all here to help out our clients where we were able to.  We can only now all look to the future, and we trust that you keep safe and healthy.

The Team at Lidgerwoods,

Marc, Sophie, Sharon, Louise, David, Kylie & Darcy

Shortcut method to claim deductions if “working from home”

As the situation around COVID-19 continues to develop, the ATO understands many employees are now working from home. To make it easier when claiming a deduction for additional running costs you incur as a result of working from home, special arrangements have been announced.

SIMPLIFIED METHOD:
A “simplified method” has been introduced that allows you to claim a rate of 80 cents per hour for all your running expenses, rather than having to calculate the additional amount you incurred for specific running expenses.

This simplified method will be available to use from 1 March 2020 until 30 June 2020. You may still use one of the existing methods to calculate your running expenses if you would prefer to.

You can claim a deduction of 80 cents for each hour you work from home due to COVID-19 as long as you are:

• Working from home to fulfil your employment duties and not just carrying out minimal tasks such as occasionally checking emails or taking calls; and
• Incurring additional deductible running expenses as a result of working from home.

You do not have to have a separate or dedicated area of your home set aside for working, such as a private study.

ACTUAL METHOD:

You can still claim the “actual expenses” method and determine a % claim on these amounts based upon diary record or floorplan records etc.

NORMAL METHOD:

Lastly you can still claim the “normal” method of 52 cents per hour (but only covering the heating/cooling/cleaning of the home office), PLUS “actual expenses” for other items.

Editor: This will be a very important claim matter to discuss with us when we prepare your tax return in 2019/20.

Superannuation Contributions – Catch up

The current 2019/20 year is the first opportunity to take advantage of the catch-up concession in respect of any unused prior year concessional superannuation contributions to a member’s superfund. If a member has total superannuation (in all Australian superfunds) of under $500,000 they can opt to claim the unused cap amount from the prior year and the current year cap amounts. ie. if an eligible individual did not contribute anything in the 2018/19 year, they can in fact double the amount they can contribute in the 2019/20 year – this would be $50,000 for most individuals instead of the usual $25,000 cap amount. We note that age based requirements are still enforced (ie. under 75 years of age) and also those over 65 must pass the work test – to claim any concessional amounts. This system is in place for the next five years, so it can be put into place in the next tax years as well, but remember a tax deduction is only useful to you if you have other taxable income in the same year as the contribution.

Editor: If you think this may apply to you and you’d like to consider using this catch-up, we recommend you urgently contact your financial advisor and our office to confirm your eligibility status, and to ensure your contribution can be paid and accepted into the fund before the end of the financial year. 

ATO's support measures to assist those affected by COVID-19

The ATO has implemented a series of administrative measures to assist Australians experiencing financial difficulty as a result of the COVID-19 outbreak.

Options available to assist businesses impacted by COVID-19 include:

• Deferring the due dates for income tax payments, Fringe Benefits Tax payments ('FBT') and excise payments up to 12 September 2020 for businesses in financial difficulty; and
• Remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities.

However, note that employers will still need to meet their ongoing super guarantee obligations for their employees.

Editor: Please contact our office if you need any advice or assistance during this difficult time.

ATO reminder for employers – Finalise STP data for 2020

The ATO has issued a reminder to employers who report through Single Touch Payroll (‘STP’) – which should be all employers, unless an exemption or deferral applies – that they will need to finalise payroll information for the 2020 income year by making a declaration. 

The due date for making finalisation declarations is:

• 14 July 2020 for employers with 20 or more employees; and
• 31 July 2020 for employers with 19 or fewer employees.

Employers that finalise through STP are not required to provide payment summaries to employees and lodge a payment summary annual report to the ATO. 

Instead, employees will be able to access their payroll information (for preparation of their 2020 tax return) through a registered tax agent or via ATO online services.

The ATO has recently announced too that employers with only “closely-held” employees has been extended from 1st July 2020 to the following year.  But we recommend you discuss with our office now to see if you can easily commence your STP software in July 2020 and start the system now.

Editor: Please contact Lidgerwoods Accountants or your bookkeeper if you require more information on finalising STP data or commencing your STP reporting system/software.

New laws can make directors personally liable for GST

The government recently passed new legislation designed to strengthen laws to "crack down on illegal phoenixing activity by dodgy business operators who try to avoid their obligations to their customers, employees and creditors."

In particular, the changes allow the ATO to collect estimates of anticipated GST liabilities, and make company directors personally liable for their company’s GST liabilities in certain circumstances (basically by including these liabilities in the director penalty notice regime).

Importantly, the expansion of the director penalty notice regime to include GST liabilities will commence from 1 April 2020.

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.

Lastly we welcome your feedback.  If you found this E-Newsletter very useful (or not?),
we’d appreciate your feedback either way.

'The Team' at Lidgerwoods Accountants