2019 tax changes for small business

As 30 June 2019 is fast approaching, we would like to advise you of some key tax changes that your business may be in a position to take advantage of before the end of the financial year.

Company tax cuts

For 2018/19 income year, companies with an annual aggregated turnover under $50m will have a reduced tax rate of 27.5%. To be eligible for the reduced rate, the company must be a base rate entity.

Instant asset write-off increased, extended and allowed for medium-sized businesses

The $20,000 instant asset write-off for small business has been increased to $30,000 from 2 April 2019. The scheduled end date of the write-off has been extended from 30 June 2019 to 30 June 2020.

Also, there is another limit of $25,000 which is available from 29 January 2019 to 2 April 2019.

For medium-sized business, which is defined as being over $10m in aggregated turnover but under $50m, an entitlement to a $30,000 instant write-off is allowed until 30 June 2020. The assets must be purchased after 2 April 2019.

Single touch payroll

Entities who are employers are required to report the following information to the ATO from 1 July 2019:

•         withholding amounts and associated withholding payments, on or before the day by which the amount is required to be withheld

•         salary or wages and ordinary time earnings information on or before the day on which the amount is paid, and

•         superannuation contribution information on or before the day on which the contribution is paid.

There are some exceptions to the single touch payroll allowed for employers who only make payments to closely held employees.

Non-compliant withholders to be denied tax deductions

From 1 July 2019, businesses will no longer be able to claim deductions for payments to their employees where they have not met their PAYG obligations. This includes where the employer is required to withhold PAYG from gross payments, but fail to report or remit it to the ATO.

PAYG withholders will be required to ensure that all lodgements are made on time to avoid large penalties with denied tax deductions.

Additionally, the deduction for businesses on certain payments to contractors which have not met PAYG obligations will be denied unless a genuine mistake has been made.

Taxable payments reporting system

Beginning with the 2018/19 income year, the following industries have introduced a taxable payments reporting system:

                • Couriers

                • Cleaners

Starting from 1 July 2019, the taxable payments reporting system will be extended to include the following industries:

                • Security services

                • Road freight

                • IT services

Entities who engage contractors, or subcontractors, will need to provide additional reports to the ATO. This treatment has the same requirements as salary and wage employees.

Fodder storage assets allowed immediate write-off

For primary producers, a new law has been enacted which allows fodder storage assets to be immediately written off.

Fodder storage assets may include silos and hay sheds, and are used to store grain and other animal feed. The immediate write-off will apply if the asset is purchased and first installed ready for use on or after 19 August 2018.

Information sourced using CCH iknow