Financial Year End is just around the corner. Are you prepared?
Covid-19 is not a valid reason for failing to file your tax on time…. But it is a perfectly valid reason for getting the right professional advice as you prepare for the financial year end.
By Michael Mekhitarian
Let’s start with stating the obvious: 2020 has been a gobsmacking year.
We’ve faced disruption on a scale that none of us could have predicted, nor that we were necessarily prepared for.
And yet while Australia and the rest of the world pretty much came to a standstill waiting for the threat of Covid-19 to ease, time didn’t.
It’s now mid-June, and what do you know? … It is almost tax time.
Prepare for FYE
It’s important for businesses to get themselves organised in preparation for the 2020 Financial Year End, and here’s why:
The ATO has extended some deadlines, but not all. And if you don’t file in time you could face hefty penalties. But that’s not the only reason.
Despite the fact that we’ve faced massive turmoil this year, and while the immediate threat may have passed, there are more challenges ahead as we navigate our way out of the planned economic slowdown and get the economy back on its feet, as well as get our own businesses operating with some sense of normality.
The environment is changed, and so it’s time for business owners to embrace the change and get innovative.
So, get your FYE wrapped up and your tax out of the way. Don’t let it hangover. Get it done and then you’re freed up to strateg deal with other important business issues, like navigating your own ‘new normal’ and thinking about your business growth. If you don’t, you won’t survive.
Jobkeeper under scrutiny
It’s imperative that those businesses which were forced into mandatory shutdown or limited trading and took advantage of economic stimulus payments, like Jobkeeper and other grants, seek professional help preparing tax returns.
If you don’t normally use a tax advisor or business accountant, now is the time to engage one simply because some of the tax treatments around these payments will be complex, and the ATO has already stated that it will be carefully monitoring those businesses which received jobkeeper or other Covid-19 business grants, and it will also be looking closely at expenses related to working from home.
Small businesses will also want to ensure that they have taken advantage of all the concessions available. For example, Treasurer Josh Frydenberg recently announced an extension of the Instant Asset Write-Off for another six months. Eligible businesses are able to instantly deduct the cost of assets worth up to $150,000. Are you one of them?
Audits are on the increase
In recent years the ATO has been given extra resources and funding from the Federal Government, essentially to crackdown on tax cheats. But this additional manpower and the ATO’s sophisticated ability to cross match data across a number of different systems means that any anomalies are picked up pretty quickly. And audits are on the increase.
It’s a common misconception that you’ll only be audited if you’re non-compliant. The actual fact of the matter is that the ATO is auditing more and more business for a variety of reasons, so it is also wise to consider audit insurance.
Audit Insurance covers the payment of professional fees, otherwise incurred by you, when audits, official enquiries, reviews or investigations are initiated by the ATO or federal, state and territory agencies. It’s really worthwhile cover, particularly because you just never know if your business will be audited.
Of course, most businesses most definitely aim to do the right thing and are tax compliant, but Australia has one of the most convoluted tax systems in the world, and any mistakes can be costly. The ATO is much less negotiable than it used to be.
You can minimise the risk of making mistakes by using good accounting systems internally, and a professional tax advisor or accountant.
Another valid reason for using a professional is that the ATO has a preference for dealing with professional agents who ‘speak the jargon’ and understand the system. This means that if you have an accountant or tax advisor working on your behalf then most matters can usually be dealt with swiftly and smoothly, saving you and your team time and frustration.
At ATB Partners, we’re small business specialists, and we have more than 60 years combined experience. If you need our help, contact us.
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