2020 Year End Information

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2020 Year End Information

The end of financial year is once again upon us. With that in mind, it is time to organise the end of year records so that we can complete your tax returns and financial reports.

TRADING HOURS

Due to COVID-19 restrictions we will not be holding any face-to-face appointments to complete tax returns this year. However, we are offering our clients phone call appointments from Monday 6 July 2020.

Our trading hours are Monday to Friday 8:30am to 5:00pm. During the period Monday 13 July 2020 to Wednesday 26 August 2020, we will be available for extended appointments on Mondays, Tuesdays and Wednesdays with the last phone call appointment at 6:30pm. Please contact our office to make your appointment as soon as possible.

For clients who have a phone appointment arranged we ask that you email or upload your client documents prior to your scheduled meeting.  

If a phone appointment does not work for you, we encourage you to email or post your documents to us or upload documents through to our FKW client portal. We will complete your return in a timely manner.

FEES

Our fees are based on the complexity of your tax return, starting from $140 (including GST). We are able to accept payment of our fees via direct deposit, EFTPOS, cash, cheque or credit card and appreciate payment prior to lodgement of your tax return. Please note we do not accept payment via AMEX.

TAX CHANGES FOR INDIVIDUALS

Working From Home Deductions

From 1 March 2020 until at least 30 June 2020, special arrangements are in place to make it easier for individuals to claim expenses they have incurred while working from home during the COVID-19 pandemic.

If you have incurred work-related expenses and you have not been reimbursed by your employer, you can claim these expenses at a rate of 80 cents for each hour you work. To use this method, you will need a record of the hours you have worked, such as a diary or timesheet.

The claim covers all of your additional running expenses such as: 

  • Electricity and gas
  • Decline in value and repair of capital items such as office furniture
  • Cleaning expenses
  • Phone and internet expenses
  • Stationery
  • Decline in value of computers and devices

The COVID-hourly rate can be claimed per individual (it is not limited by household). That is, if you have multiple people working from home in your household, each person can claim the 80 cents per hour rate for the hours they have worked from home.

Cents per Kilometre Change for Work-Related Car Expenses

The rate at which work-related car expenses can be claimed using the cents per kilometre method will increase from 1 July 2020 from 68 cents to 72 cents per kilometre. Using this method a maximum of 5,000 business kilometres can be claimed per year per car. 

ATO Focus on Work Related Deductions

Work related deductions are again being closely focused on by the ATO. Please be mindful of this when gathering your work related expenses this year as well as the ATO’s three golden rules:

To claim an expense you must have paid for something and not been reimbursed;

The expense must be directly related to earning income and not a private expense; and

You much have a record to prove and substantiate the expense (such as valid log books, invoices, receipts, credit card statements and diary records)

The ATO is paying particular attention to telephone, internet and mobile phone deductions being claimed. In order to claim these deductions this year you will need to provide a 4 week diary record to support the work related proportion of the expenses you incur. If this record is not available the ATO will limit your allowable deduction to $50.

Personal Superannuation Contributions

A reminder that an individual is now able to make personal deductible superannuation contributions regardless of whether they are self-employed or not. Individuals at a lower tax rate would need to make sure what contributions they can make before claiming a deduction. They can review their superannuation accounts to see their employer contributions to date.

Individuals need to be reminded that the concessional contributions cap is $25,000 for the 2020 financial year.

Additionally, individuals earning over $250,000 in taxable income need to be aware that Division 293 tax will apply to concessional superannuation contributions.

If you intend to claim a personal superannuation contribution please ensure that you have completed the ‘Notice of Intent to Claim a Deduction’ declaration and have submitted it with your superannuation fund prior to the lodgement of your tax return. We require acknowledgement of your valid notice of intent from your superannuation fund in order to claim a tax deduction in your income tax return.

2020 Individual Income Tax Return Checklist

Should you require assistance collating documentation for your 2020 income tax return, please contact our office to request a checklist. Once completed, please email or upload the completed checklist to our client portal along with your documents.

TAX PLANNING FOR BUSINESSES

It is not too late for some last minute tax planning before 30 June 2020. Here are a few things you can consider:

  • Review your debtors – Write off the receivables you know you will never get paid for;
  • Do a stocktake – Review your stock levels, and if you have old stock, it is time to write it off or revalue it. Best practice is generally to value stock at the lower of cost or market value;
  • Review your asset register – Check to see if obsolete plant and equipment is sitting on your depreciation schedule. If the plant has become obsolete consider writing it off before 30 June 2020;
  • Consider prepaying expenses – Small business entities can claim an outright deduction for eligible prepaid expenses such as lease payments, rent, insurance and interest if specific conditions are met;
  • Realise any capital losses and reduce gains – Neutralise the tax effect of any capital gains you have made during the year by realising any capital losses;
  • Claim immediate deduction for depreciable assets costing less than $150,000 – Consider purchasing new business equipment costing less than $150,000 prior to 30 June 2020 to utilise the immediate deduction write-off. To be eligible to claim an immediate deduction, the asset must be available for use prior to 30 June 2020. From 1 July 2019 to 12 March 2020, taxpayers with a turnover less than $50 million can write off assets costing less than $30,000. From 12 March 2020, taxpayers with a turnover less than $500 million can write off assets costing less than $150,000.

We all look forward to being of continuing service to you, and the greatest compliment that you can give our practice is the referral of your family, friends and business associates.