November 2020 Newsletter
- Unpacking the Budget
- Superannuation for the self-employed
- Significant insolvency reforms – what Directors need to know!
- Understanding the Payment Times Reporting Scheme
- Should older Australians downsize their property?
- Financial ratios for the bank
On 6 October 2020, in delivering his second budget, the Treasurer, Josh Frydenberg, unveiled an estimated budget deficit for 2020–21 of $213.7 billion. This month, I take a close look at the key tax announcements contained in the Federal Budget 2020–21.
Results collated by Household Capital show that only one in four Australians is very confident they have sufficient funding to live well in retirement. The survey revealed that many Australians who did not touch their superannuation during the COVID-19 early access to super scheme are still unlikely to have a large enough portion of their wealth in superannuation to comfortably retire.
1. Debt Service Coverage Ratio 2. Leverage Ratio 3. Loan to Value Ratio
Announcements:This month we wish a very happy birthday to Dee!
Important ATO Dates
|Lodgement Program||Due Date|
|September monthly activity statements||21/10/2020|
|Quarter 1 (July–September) PAYG instalment activity statement||21/10/2020|
|Annual PAYG instalment notice||21/10/2020|
|Quarter 1 (July–September) activity statements||28/10/2020|
|Quarter 1 (July–September) – super guarantee contributions||28/10/2020|
|Quarter 1 (July–September) GST instalment notices (forms S and T)||28/10/2020|
|Quarter 1 (July–September) PAYG instalment notices (forms R and T)||28/10/2020|
|Lodgement Program||Due Date|
|October monthly activity statements||21/11/2020|
It is also the due date for new entities enrolling for JobKeeper, and these will need to enrol and submit their “Check decline in turnover” form to the ATO online.
Employers – New Tax Tables
Please be aware that the government recently announced some tax changes which will require the tax tables to be updated in your payroll software. Your tax tables need to be updated before the 16th Nov 2020 deadline.
For those using cloud based accounting software this process is done for you e.g. QuickBooks Online, Xero, KeyPay. If you are manually calculating your employees PAYG you will need to find and start using the new rates (see link below).
For more information on these changes, please visit https://www.ato.gov.au/rates/tax-tables/#Importantinformationforthisyear
You do not need to do any backdating, just apply the new tables as soon as possible as the ATO has confirmed that any excess tax that employees pay from 1 July will be included in their tax assessment at the end of the 2020 financial year.
Significant change to claiming the GST on a new motor vehicle purchase and running costs!
Earlier this year there was an amendment to a tax ruling that made it imperative that anyone wanting to claim the GST on the purchase of a vehicle would need to adequately substantiate their claim using the logbook method. Effectively without a valid logbook you can’t claim any portion of the GST back on the initial purchase. A logbook is also required to claim your current running costs!
The LogBook Method
If your business has motor vehicles (under 1 ton & less than 9 passengers) you are probably already aware of the logbook method for claiming business related expenses such as running costs and decline in value.
Earlier this year there was a change to the method for calculating the GST you can claim on your vehicle that now makes it imperative to use a logbook (or diary) for at least four weeks to calculate your business-use percentage for the purpose of calculating the GST you can claim.
For those already keeping a logbook there is no additional requirements as you can use your existing logbook. Our recommendation is that businesses with a motor vehicle should keep a logbook for a continuous period of at least 12 weeks, by doing so you satisfy the requirements for calculating both:
- the GST you can claim on a motor vehicle purchase and running expenses, and
- business related expenses you can claim for income tax purposes
By keeping a logbook for a continuous period of at least 12 weeks you satisfy the tax office recording requirements for 5 years before you are required to start the process again (if still required and assuming there have been no material changes to your motor vehicle use).
Can I claim the GST on a new car purchase?
Generally speaking, you can claim GST on the purchase of a new motor vehicle if you meet the following criteria:
- you intend to use your purchase solely or partly in carrying on your business and the purchase does not relate to making input-taxed supplies
- the purchase price included GST
- you provide, or are liable to provide, payment for the item you purchased
- you have a tax invoice from your supplier
How much GST can I claim on a car?
- When it comes to claiming GST on a car, it’s very similar to claiming GST on any other business expense.
- You can only claim the GST to the percentage that it relates to earning an income in your business.
- So you need to keep a logbook. A logbook tracks the number of business-related kilometres that you drive, and your total kilometres in that time. This will give you your ‘logbook percentage’.
- Your logbook percentage will tell you the percentage of GST, and tax deductions for car related expenses that you can claim in your BAS and tax return.
- Also note that if you buy a car with a GST-inclusive value above the LCT (Luxury Car Tax) threshold, there are limits to the GST you can claim based on the fuel efficiency of the vehicle
When can I claim the GST on a new car?
- If your business is registered for GST on a cash basis then you can claim the GST on the new car in the quarter that you take delivery (or settlement) of your car. This is because either your finance company has ‘paid’ for the car on that date. Or, you’ve paid for that car in full from your bank account.
- Your upfront claim of the GST can be used to fund the first few instalments payable to your finance company.
If you have any questions regarding claiming the GST and/or business-related expenses on motor vehicles please contact our office. We can also provide a logbook or recommend a logbook app to suit you!
Watts Price Accountants (Horsham) 03 5382 3001 or firstname.lastname@example.org
Knights Accounting (Rupanyup) 03 5385 5330 or email@example.com
It’s time to ditch snail mail and embrace eSign for faster, more secure BAS communication!We have been trialling electronic delivery & signing software with many of our Salary & Wage clients over the last month and have received very positive feedback. We believe that this method of delivery would provide a faster, safer and more efficient experience for many of you. To that end we are looking at expanding the trial to BAS clients for the September BAS.
Appointment Procedures Due to COVID
Now that Stage 3 restrictions have been removed in Regional Victoria, Watts Price Accountants and Knights Accounting have re-opened the doors and are now able to hold face to face appointments again. For the health & safety of everyone please note the following requirements when attending our office(s):
- Social distancing rules are still in place and we are all required to maintain a distance of 1.5 metres
- You are required to wear a face mask
- You may be asked to sanitise your hands and be subject to a temperature check upon entry
- If you are experiencing any of the following symptoms –
- cough, cold, sore throat, fever or
- Been to a known hotspot or been in contact with someone that has in the last 2 weeks – please do not enter our office(s). Phone our office to discuss your options!
For your safety and convenience, we are:
- Still very happy to conduct phone or video conferencing (Zoom) appointments
Please note: In the interim some Partners and accountants will prefer to conduct appointments using one of these options. You will be advised of your options when you are booking your appointment.
- We are staggering our appointment times to minimise contact with other clients
- The Watts Price front meeting room will be used as an extra reception area
- We will be placing hand sanitiser in appropriate locations
- Meeting areas are being wiped down after each appointment
These measures are necessary under the current restrictions to protect you and our team. We thank you in advance for your co-operation and look forward to seeing you again soon! If you need assistance please contact us on: