Wow, that was a big one wasn’t it? The pandemic impacted us all to various extents. An introvert’s dream (self-isolation is just our way of life), and an extrovert’s nightmare. For us business owners, it was tough, for a whole variety of reasons.
For us at Peak, the COVID tax incentives were a great move by the Federal Government, but it put enormous pressure on our team at a time in which we had lodgement deadlines looming. I must thank for Peak family for the huge effort they put in to get us through this incredible business phase. There were some huge hours and more than enough weekends. But we lived up to our values, and that is “relationships”. We had to make sure our clients were looked after, and we made sure we guided them through the daily updates and changes that we were hit with. My Peak family are getting tired now, and certainly need a break, but I am so proud of them and the effort everyone put in. Before we wrap up the year, I wanted to take you through some tax planning tips and year-end tidy ups.
Your End of Financial Year “to-do-list”
As we are heading towards the end of the 2020 financial year, we have listed below for you some items you need to go through before you wrap up the year.
Review your customer debtors outstanding balance
Write off any bad debts.
Ensure owners make payment to their personal accounts.
Write off shop consumables account.
Write off donation accounts.
Chase up payments for any long-term outstanding amounts.
Review stock on hand
Ideally you will want to undertake a physical stock take prior to 30 June 2020. If no physical stock take is planned, please review the stock on hand report and check negative stock items (either pricing or stock count), obsolete stocks, or stocks that need to be written off. Ensure you update your POS accordingly. Note any dead stock that needs to be written down. • Make sure your POS system has a clean cut off on 30 June 2020 – all tills and system settled and closed, all cash relating to 30 June or prior are banked separate to the cash received from 1 July onwards.
Count all cash
Count all cash on hand (tills, petty cash, change float etc) at the end of the day on 30 June 2020.
Superannuation payments must be paid and receipted prior to 30 June 2020
For you to obtain the deduction in the 2020 financial year. Make sure all employee super payments are made early.
Instant Asset Write-Off
You may be aware the Instant Asset write off was lifted to $150,000 from 12th March 2020 and recently announced extended to 31 December 2020. For those who are looking at taking advantage of this remember the timing of the deduction is not based on invoice date. It is based on when the asset is installed ready for use. It is important you understand the difference. The timing points here are very different. Also note those who have used this to buy a new car, remember there is the limit on the cost you can base the depreciation on. For 2020 financial year this is $57,581. Meaning the maximum amount you can claim for a Motor Vehicle is $57,581. Also note the deduction is also limited to the business usage. So if your business usage of that car is 75%, the maximum amount you can claim is 75% of $57,581.
Cashflow Boost
Second phase A reminder that the second phase of the cashflow boost runs from June to September. For March to June the Cashflow Boost, which is based on your PAYG Withholding, ranges from a minimum of $10,000 to $50,000. The amount you are entitled to receive during the June to Sept phase is essentially the amount you claimed during the March to June months.
JobKeeper
It is a good idea to constantly check your eligibility for JobKeeper. You can register at any time during the 13-fortnight period that runs from March 2020 to September 2020. And once you are eligible you remain in the system until the 13-fortnight period ends, being 27th September 2020. If you are not sure of your eligibility, please contact us at Peak and we can help you understand the eligibility tests (basic test and alternate tests) and how they apply to your situation. What is a good starting point is for any month determine what your eligibility thresholds are, and if it looks as though you may be below this, make sure you contact us so we can check your eligibility and take you through the registration process.
Home Office Expenses
For those who are working from home whilst isolating during the Covid-19 period, particularly late March, through April and May (obviously not pharmacy land who were on the front lines) you can claim a deduction of 80 cents for each hour you worked from home from 1 March 2020 to 30 June 2020. Normally the rate is 52 cents per hour.
Payroll Tax
For those in WA don’t forget the Payroll Tax measures which come into play from 1 July 2020. The payroll tax threshold will increase to $1m from 1 July 2020. For those larger pharmacies, or those who are grouped, where the taxable wages is between $1m and $4m, there is a once-off $17,500 grant. Lastly for those who have taxable wages less than $7.5m, payroll tax will be waived from March to June 2020. Also note JobKeeper wages are exempt from Payroll Tax.
ATO Integrity Unit
Also, a reminder to every business owner the ATO Integrity Unit is alive and well and making sure business owners are compliant with the tax regulations. So be careful. Above all please seek advice before acting.
Here at Peak, we hope you can look forward to 2021, with a 7CPA done and dusted, and sales set for another big year.
A pharmacy owner asked me the other day (as you all know we specialise in pharmacy) do I still see pharmacy’s future with optimistic eyes. My answer was a definite yes. Why? COVID-19 clearly demonstrated how vital you all are to maintaining the communities health and enabling the public has easy access to medicines. You all have so much to offer. You all have communities out there that you need to reach out to and connect with. And still so many ways you can evolve and change. It’s the brave who choose to do things differently.
Written by John Thornett.