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Year End 2021 - Businesses

Year End 2021 - Business Owners

Coming into the new financial year, these are some of the important updates and ATO focus areas that all business owners should be aware of.

Superannuation Guarantee Increase to 10%

The Superannuation Guarantee (SG) rate will rise from 9.5% to 10% on 1 July 2021 and will then steadily increase by 0.5% each year until it reaches 12% on 1 July 2025.

If you have employees, what this will mean depends on your employment agreements. If the employment agreement states the employee is paid on a ‘total remuneration’ basis (base plus SG and any other allowances), then their take home pay might be reduced by 0.5%. That is, a greater percentage of their total remuneration will be directed to their superannuation fund. For employees paid a rate plus superannuation, then their take home pay will remain the same and the 0.5% increase will be added to their SG payments.

Temporary Full Expensing Extended to 30 June 2023

Temporary full expensing enables your business to fully expense the cost of:

  • new depreciable assets
  • improvements to existing eligible assets, and
  • second hand assets

in the first year of use.

Introduced in the 2020-21 Budget, this measure enables an asset’s cost to be fully deductible upfront rather than being claimed over the asset’s life, regardless of the cost of the asset. The Government plans to extend these rules to cover assets that are first used or installed ready for use by 30 June 2023.

Certain expenditure is excluded from this measure, such as improvements to land or buildings that are not treated as plant or as separate depreciating assets in their own right. Expenditure on these improvements would still normally be claimed at 2.5% or 4% per year.

The car limit will continue to place a cap on the deductions that can be claimed for luxury cars ($59,136 in 2020-21 and $60,733 in 2021-22).

Reporting payments to contractors

The taxable payments reporting system requires businesses in certain industries to report payments they make to contractors (individual and total for the year) to the ATO. ‘Payment’ means any form of consideration including non-cash benefits and constructive payments. Taxable payments reporting is required for

  • Building and construction services
  • Cleaning services
  • Courier services
  • Road freight services
  • Information technology (IT) services
  • Security, investigation or surveillance services
  • Mixed services (providing one or more of the services listed above)

The annual report is due by 28 August 2021.

The ATO has contractor payment data from 158,000 businesses from 2019-20 and is using data analytics to ensure that contractors have reported all income received and where required, their GST obligations have been fulfilled.