PVBG - Accounting & Taxation Update 2021

By Peter Vickers Business Group | small business, Accounting, tax |

COVID 19 & GOVERNMENT ASSISTANCE

We have assisted our clients to obtain the assistance packages that are available. For bookkeeping purposes the Cash Flow Boost and the Jobkeeper payments should go into separate income accounts as the Cash Flow Boost is not taxable while the Jobkeeper is.

The non-taxable Cash Flow Boost thus presents some interesting issues when paying out trust distributions or dividends which we of course will help you resolve.

ASSET WRITE OFF

The date for the asset to be installed ready for use in order to write off the total cost has been extended to 30 June 2022. This applies to new eligible depreciating assets if your aggregated turnover is less than $5 billion and for used equipment if aggregated turnover is under $50 million. However this extension is only for assets acquired after 6 October 2020. The rules for last year have various other dates, amounts and turnover thresholds with which we can help you.

The common sense rule for buying assets and getting this tax benefit is that you only buy an asset that you need and will make a profit using. It is not wise to buy assets only for the tax deduction.

IDENTIFICATION DOCUMENTS

A major cost for government is identification of people in Australia. With 25 million Australians, governments need an efficient system for interaction with them.

In 1985 Bob Hawke suggested the Australia Card but this was opposed and the alternative identification introduced was the Tax File Number. With the introduction of the GST, came the Australian Business Number which is required to avoid withholding tax being deducted from interest and unfranked dividends and also for claiming GST back on invoices.

We have now moved on to MyGov and MyGovID. To this has been added the PRODA (Provider Digital Access from Services Australia) and the Service NSW app due to COVID 19 is now needed for shopping with a QR code. The ATO has foreshadowed using face recognition software.

What is important for children is that they build up their identification documents so as to be able to join the regulatory system.

It is also important for seniors to maintain their photo IDs even if they stop driving or going overseas. The same applies to have a modern telephone. As an example, the Covid Safe app did not work on older generation IPhones.

Here I will mention an identification issue that one of our elder clients had (she is 96 years old). After migrating to Australia after the Second World War with her husband, she anglicized her first name but kept her married name the same. Her husband then changed by deed pol the family name to something that was pronounceable. The lady then said “all my friends know me by my birth, first name”, so she went back to using that.

They had purchased a home with another relative couple as 4 tenants in common. As the other three owners died the titles were passed down to her. The only problem was that her name appeared differently on two titles. After the death of her husband she needed to prove her identity for the transfer of the titles to her. She had stopped driving some years ago, so no drivers licence. She stopped going overseas, so thus no passport. Her electricity and telephone were put in her son’s name as this was the easier way to pay the bills.

She was unable to communicate adequately on the phone to approve these transactions. The rate notices were in joint names but without the first name being indicated, just initials. Her solicitor had to obtain copies of a string of documents all with imperfect names and had to explain the history of her names. In the end the Land Titles Office had no choice but to accept these documents but it was a long and involved process, it is important when changing your name that all your legal documents reflect this name change correctly.

DIRECTORS IDENTIFICATION NUMBER

This was passed by Federal parliament last year. Every director will have to have a unique DIN, Directors Identification Number.

It is expected that the registration process will begin in the beginning of this year - 2021, PVA will contact all clients that are directors of companies on our computer Corporate Register System to help you do this.

However it is likely that the registration process will be like MyGov or MyGovID that needs to use a recent mobile phone that will photograph your documents or alternatively the PRODA.

When you asked for your Services NSW app, so that you can go shopping via the QR code at the front door, you will have noticed that your driver’s licence and Medicare cards are all linked.

LODGEMENT DEADLINES

Standard tax returns for the 2019/20 year must be lodged by 17 May 2021.

If you have not met previous deadlines or owe tax or are a large or new tax payer then earlier dates apply. If you are not on a tax agent’s lodgement list then the due date was 2 November 2020 as the 31 October fell on a weekend.

We process accounts and tax returns in the order that you give us the complete information. We do require a minimum of 2 months to process accounts and tax returns so 15 March is our deadline to meet the ATO deadline.

We do not mind if your work comes in later as this spreads our work over the year but you must be willing to pay the ATO penalty for late lodgement.

We try our hardest to assist clients but miracles and crystal balls only exist in Harry Potter movies.

The ATO is now receiving information on the sale of shares and property and is checking this with individual’s tax returns, so please provide this information to us.

ADMINISTRATION

We repeat the advice that clients should embrace internet banking and cloud bookkeeping.

As an example, sending us a cheque for our fees is super inconvenient as our bank has closed its Lindfield branch.

We can help you set up internet banking if you are uncertain. Cloud accounting like MYOB and Xero allow both the client and the PVA accountant access and means that we are not maintaining two general ledgers. However this requires a greater level of care from clients and a requirement that they consult with us if they have a problem rather than leave this to the end of the year.

All shares should be on a Chess register either with your Share Broker or we can act as a virtual broker via our registration with Commbiz Advisor Services. For individuals you need to ensure that the share registry has your tax file number so that the dividends can be automatically up loaded into your personal tax return by us from the ATO computer.

Not lodging your tax return in time can be a costly mistake. We've outlined the crucial dates you need to remember here.

If you’d like more information on how to grow your business, please contact one of our accounting and tax experts using the button below.

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