COVID-19 pandemic has greatly affected many aspects of our business operations. One of the affected areas is taxation.
Besides increasing the time to file taxes for 2020, there are several other things the federal government has introduced – that definitely make the filing of tax different from the previous years.
For example, the tax relief reliefs introduced by the government have affected business in different ways. As a business owner, you need to understand how the new regulations will affect you in terms of filing taxes.
Besides, you also need to try and find ways of taking advantage of the adjustments made to caution businesses across the country.
Below are some tips for tax planning strategies:
1. Instant Asset write-offs
When the federal government introduced the COVID-19 stimulus package, there were several benefits that came with it. For example, the threshold for instant asset write-off was increased up to $150,000 per asset from the previous $30,000.
The offer was given to businesses that have an annual turnover tax of $500 million and below. The amendment is applicable to all transactions done from 12 march to 30 June 2020.
2. Deductions for prepaid costings
Another important tip tax tip is that if your business has a total turnover of $10 million and below, then you are allowed to claim immediate deductions for specific expenses transacted by June 2020. This includes interest, rent, lease payments, business subscriptions, insurance, and business travels.
3. An incentive for business investment
In case the assets you are planning to buy do not qualify for an instant write-off, an extra 50 percent will be deducted the year it will be bought. Besides, the current depreciation regulations still apply to the costs of the asset.
All businesses that have a total annual turnover of $500 million and below are qualified to receive this incentive for all assets or property purchased from March 2020 to June 2021. https://www.thebalancesmb.com/top-tax-tips-for-home-business-owners-1794166
4. Do away with obsolete equipment
If you have obsolete equipment sitting idle and have not been put to any meaningful use, they should be scrapped and written off by the end of June. This will help you to create some extra tax deductions.
5. Postpone capital gains and income tax
Any business that files income tax using cash is assessed using the income amount presented. As such, the best tax strategy here is to delay the time you receive the income until the end of June 2020.
This will definitely help you avoid being overcharged or assessed using a tax formula for the previous year.
6. Claim concessional superannuation contributions
The highest amount one can claim for concessional superannuation contributions is $25,000 – both for individuals and employer contributions. If you are planning to file a claim on the contributions in the 2020 financial years, then the request should be placed by the end of June 2020.
7. Apply for claim deductions for all expenses not paid by the end of the year
Every business in the United States has a right to immediate deductions for particular expenses that were incurred but not paid. They include the following:
• Director’s fees – An organization can claim tax deductions of director’s fees it had committed to but have lapsed the appropriate resolution period of payment approval.
• Wages and salary – Tax deductions can also be claimed for the total number of days an employee has worked but hasn’t been paid.
• Repair and maintenance – you can also claim a deduction for any repairs conducted and billed by June 30th, 2020 but haven’t been paid.
• Employee commissions and bonuses – Businesses are also allowed to claim deductions for employee commissions and bonuses owed and not paid as at the end of June 2020.
In a nutshell, having a good tax strategy for your business is very important. You need to consider the above-mentioned tips and many others – to help you come up with a tax plan that will save money for your business.