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If Cash is the King, Cashflow is the Queen

Gone were the days when businesses were operating cash on hand, and now the modern world has bought a new way of receiving cash through direct debits and credit cards. No matter what you call it, at the end of the day you are rich if your bank balance is healthy. The terminology of Cash is the king, still reflects the beliefs of the olden society that no matter what, cash is still the asset of a business.

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Home-based Business- Subject to CGT

With advanced technology, and increasing rent, most small businesses are run from home to save on cost and travel. Unfortunately, most of the small business owners are not aware that conducting a business from home could be potentially subject to CGT especially if you are a sole trader.

Usually, your family home is exempt from Capital Gains Tax (CGT) as it is your main residence, however, if you are a sole trader running the business from home, you could potentially expose your main residence subject to CGT. The question here is not whether you claimed any occupancy expenses whilst running the business from home, but the fact would be based on whether your were eligible to claim the cost of running your business from home.

The few exemptions are:

  • Businesses run under a company or trust structure will not have the CGT implications.
  • Businesses operated from a rented home will not have CGT implications.

 

So before you start running your business from home, talk to your Accountant or Tax Agent.

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SINGLE TOUCH PAYROLL (STP)

Single Touch Payroll (STP) is a new way of reporting tax and super information to the ATO.The information is sent to ATO either directly from your software, or through a third party – such as a sending service provider. From 1st of July 2019, all small businesses would be required to be registered for STP.

Small businesses can contact they accounting software companies to find out how to register for STP. Major accounting software, such as MYOB, Quickbooks, Reckon, and Xero are all compliant with STP. There are number of payroll software in the market that also provides a free STP payroll system so that small businesses can utilize these functions without incurring hefty cost.

Small businesses do not need to change how and when they pay the employees. Every time a pay period is processed, the information goes directly to ATO. Therefore, 30th of June 2020, there will be no need to prepare end of the year payment summaries as the information will be reported throughout the year.

The new measure is a step forward to better compliance and for ATO to cross check the payroll and super information to ensure small businesses are accounting it correctly.

So are you ready for STP?

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Instant Write off Thresholds

Small business instant write off has just increased. Small businesses can take advantage to claim up to $150,000 from 12th of March 2020 to 31st of December 2020. This threshold applies to each asset irrespective of whether the asset is purchased new or second-hand.

 
Date range Threshold foreach asset
7:30pm (AEDT) 02/04/2019 to 11/03/2020

$30,000

29/01/2019 to before 7.30pm (AEDT) 02/04/2019

$25,000

7.30pm (AEST) 12/05/2015 to 28/01/2019

$20,000

01/01/2014 to prior to 7.30pm (AEST) 12/05/2015

$1,000

01/07/2012 to 31/12/2013

$6,500

01/07/2011 to 30/06/2012

$1,000

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