As the new tax year came into force, here are a few key changes that small businesses should be aware of.
Spouse contributions into super
From July 1, 2020, the age limit for spouse contributions into superannuation will increase from 69 to 74 years.
Company tax rate for small businesses reduced
The corporate tax rate for small and medium companies with turnover under $50 million will reduce to 26% in the 2020-21 year, from the current 27.5%. This rate will reduce further to 25% in 2021-22.
Changes to CGT for expats with Australian properties
From July 1, 2020, foreign residents who own houses that they previously lived in while they were in Australia will no longer be able to claim the main residence CGT exemption when they subsequently sell.
Single Touch Payroll begins for closely held businesses
From July 1st 2020, closely held payees (someone who is directly related to the entity) will need to start reporting through Single Touch Payroll (STP).
Instant asset write-off extended
From 1st July 2020, the $150k threshold for the immediate write-off for assets acquired by businesses with aggregated turnover of less than $500 million has been extended.
Reduced minimum drawdown for account-based pensions
The government has temporarily reduced the minimum drawdown requirements for account-based pensions by 50% for the 2019-20 and 2020-21 years.
Early access to super (second instalment)
For those who were financially affected by COVID-19 and accessed up to $10k of their superannuation in the 2019–20 year, they can also access a further $10k in the 2020-21 year by 24th September 2020.
Increased small business income tax offset
You can claim the small business income tax offset if you are a small business sole trader or have a share of net small business income from a partnership or trust. For the 2020–21 income year, the small business income tax offset increases to 13% in 2020–21 and to 16% from the 2021–22 income year.
Backing business investment – accelerated depreciation
From 12 March 2020 until 30 June 2021, the Backing business investment measure provides a time-limited (15-month) investment incentive to support business investment and economic growth by accelerating depreciation deductions. If you are using the simplified depreciation rules for small business, you can claim 57.5% of the cost of the asset (for those assets that cost more than the instant asset write-off threshold) in the first year you add the asset to the small business pool. If you are not using the simplified depreciation rules for small business, you can claim a deduction of 50% of the cost or opening adjustable value of an eligible asset on installation.
MSI Taylor – your Brisbane Small Business Accountant
With the ever-changing horizons concerning tax and other legislation, it is vital you have an accountant who can give you trusted and up-to-date advice. For tax, business advice and financial planning, contact us for a consultation or call us on (07) 3512 8888.