An end-of-tax year preview in a post stimulus world



The relaunch of Intuit QuickBooks’ popular ProAdvisor Program was an opportunity to hear insights from tax expert Robyn Jacobson, senior advocate, The Tax Institute, about areas of focus for accountants and bookkeepers in the lead-up to the end of the financial year.

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Get set for tax time

The end of the tax year is fast approaching. Accountants and bookkeepers are gearing up for a very different EOFY season this year, in the wake of a huge raft of COVID-inspired government stimulus measures introduced over the past year. Many have spent the year helping their clients access these initiatives.  

To help them prepare for the 2020–21 tax year end, Intuit QuickBooks recently hosted its first-ever ProAdvisor Hour of Power webinar. The event, part of a regular series, is an opportunity for accountants and bookkeepers to learn about the latest industry trends from subject matter experts. 

Intuit QuickBooks has recently re-launched its ProAdvisor Program for accountants and advisers, which delivers members more than $2,500 in benefits including access to tax and BAS compliance software LodgeiT and leading workflow collaboration platform Karbon.

The event featured Robyn Jacobson, senior advocate, The Tax Institute, who delivered an insightful keynote delving into what’s on the tax landscape as we head towards the end of what has been a very challenging financial year for accountants and bookkeepers.

Moving into a post-government stimulus world 

Most government stimulus measures introduced to help the economy weather the COVID storm have now ended or are coming to an end, including the JobKeeper wage subsidy and the cash flow boost. Figures from Treasury indicate JobKeeper has supported more than 3.6 million workers and around 1 million businesses through payments totalling nearly $70 billion for the first 13 fortnights of JobKeeper alone.

The very generous instant-asset tax write-off that allowed businesses with aggregated turnover of less than $500 million to instantly write off the cost of depreciating assets $150,000 has now ended (the threshold has now reverted to $1,000 for small business entities only, that is, those with an aggregated turnover of less than $10 million). For practical purposes, businesses with an aggregated turnover of less than $5 billion have until the end of the 2021–22 tax year to avail themselves of the more generous full expensing of depreciating assets measure. Commercial and residential tenancy relief programs put in place early on in the pandemic are also ending.

“In the middle of this year, we'll also see the end of the backing business investment measure, which allowed an accelerated rate of depreciation of 50 per cent for new depreciating assets,” says Jacobson.

Navigating intricate tax rules

New measures are in place for the 2020–21 and the 2021–22 income years that allow companies to carry back losses dating back three income years. Jacobson notes the rules around this, as well as the full expensing of depreciating assets measure, are complex. She urged advisers with clients taking advantage of these schemes to ensure they know exactly how the provisions work and seek specialist advice if they are unsure. It’s also essential to fully understand how other special provisions introduced to support businesses through COVID-19 apply to each client’s individual circumstances.

“There's been a significant issue relating to the requirement to have an Australian Business Number (ABN) and evidence of business activity by 12 March last year to be eligible for JobKeeper (on the basis of business participation, not employees) and the cash flow boost. There’s been a general misunderstanding by some businesses and tax practitioners that an entity is eligible for JobKeeper as long as the entity made sales before 12 March 2020. But one of the conditions in the law says you needed to make taxable supplies in a tax period that ended before 12 March 2020 to be eligible,” she adds.

This means that new businesses may be eligible for JobKeeper or the cash flow boost if they commenced trading operations at the start of 2020 (made sales in January or February and report their GST monthly). But new businesses are not eligible if they started operations and made sales in January, February or before 12 March 2020, but report their GST quarterly. A limited pathway may be available if the entity happened to open a bank account by 31 December 2019.

“It’s been frustrating, even distressing, for some businesses to find out that they're not eligible,” says Jacobson. 

These are just some of the very complex issues with which accountants and bookkeepers are grappling with in the lead up to the end of the tax year. It will be important as we approach 30 June to start preparing clients in a timely fashion to ensure their affairs comply with all the tax rules, so clients are able to enjoy all the incentives and stimulus measures to which they are entitled.

Intuit QuickBooks’ cloud-based accounting software is one of the tools available to the tax community in the lead-up to the EOFY, giving them and their clients confidence their financial information is accurate and up-to-date. 

Becoming a part of the ProAdvisor Program takes you to the next level, helping to streamline tax time and improve the way accountants and bookkeepers run their practice.

To sign up, simply go to the QuickBooks Online Accountant portal and sign up to join a growing community of like-minded professionals and enjoy a host of great benefits.

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