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Rent Concessions, Property & Commercial Enterprises – What Do You Need To Know Tax-Wise?

Over the last 12 months, there have been many notable schemes promoted by state and federal governments to assist businesses and individuals with much-needed tax relief. Numerous relief schemes have been put into place to assist those with rent relief for their businesses.

Rent is a major business expense. It is one that many businesses across the country have often had to face in one way or another.

To address the issues that many businesses faced with lockdowns and cashflow issues as a result, some businesses were eligible to apply for rent concessions as a result of the impact of COVID-19, which could be as either a waiver or as a deferral.

Waiver

In the event that a waiver is the available rent concession, the tenant no longer needs to pay the amount of rent that has been waived.

Deferral

The tenant is still required to pay the amount of rent deferred, but the amount can be paid at a later stage (in the event that the ruling of the rent concession is as a deferral on payment).

Tenants who receive rent concessions from their landlords and landlords who give rent concessions to commercial tenants need to be aware of the difference between payments that are waived and deferred. Getting the two wrong can be costly, as rent payments are often a significant impact on the cash flow of a business. Missing payment due to a misunderstanding of the rental concession type you may have been afforded could be detrimental.

Property and tax is a tricky subject that goes beyond these rent relief measures and concessions. As the schemes start to dial back, it’s important to remember that tax and your dealings with property is an ongoing conversation you may need to revisit and reacquaint yourself with.

If you own, lease or rent a property that is used for business purposes (whether commercial, such as a shop or an office, or even your own home) you need to be aware of the tax implications and obligations that you will have to fulfil.

If you are in possession of a property that is used in such a manner, you:

In your dealings with property, you will also likely have additional tax obligations, including those relating to one-off transactions (such as the buying, selling, leasing or developing of property).

This could result in the Australian Taxation deciding that those one-off transactions should deem you as conducting an enterprise. If the turnover from these activities is more than the GST registration turnover threshold (what you are allowed to bring in before reaching a limit), you may be required to register for GST.

Ensure that your tax obligations and consequences are met by consulting with us. We are equipped with the knowledge to assist you. You can also enquire about potential tax concessions surrounding rent and property with us, as there may be more available to you and your business than you might think.

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Business Activity Statements – How To Take The Sting Out Of The Quarterly Payment

January 24, 2022

Been hearing a lot about business activity statements, and feeling more than a little pressure?

Kicking off the new year for your business shouldn’t be shrouded in the darkness that can be a looming BAS. But how can you be certain that your business is prepared?

To start with, demystifying the BAS might alleviate some of that anxiety and pressure your business may have been facing. Essentially, a business activity statement (BAS) is a government form that all businesses must lodge to the Australian Tax Office (ATO). All businesses registered for GST need to lodge a business activity statement (BAS). This can be done with the assistance of a registered tax agent or BAS agent.

A BAS is a summary of all the business taxes you have paid or will pay to the government during a specific period of time. You may lodge your BAS monthly, quarterly or annually (depending on the size of your business you may not have the annual or quarterly option) or may do so through your tax/BAS agent.

When lodging your BAS, you need to include these payments within it:

A BAS is issued by the ATO either monthly or quarterly. A form needs to be lodged with the ATO and payment made to the ATO by the due dates as follows:

(as registered tax agents we are given an extension to most of these deadlines)

You may instead be eligible to submit an Instalment Activity Statement (IAS). In the IAS, the ATO tells you every quarter what your GST instalment amount is and where applicable your PAYG instalment amount is.  Essentially, the IAS is a form that is similar to the BAS, but simpler in that you do not have to be concerned about GST and some other nominated taxes.

Businesses that are not registered for GST and individuals who are required to pay PAYG instalments or PAYG withholding (such as self-funded retirees) use this form to pay PAYG.

IAS provides a little more flexibility in the arrangement as the instalments are advised by the ATO on what you need to pay to cover your liabilities.

You may be able to vary those amounts if you feel that the advised instalments are too much or not enough to cover your liabilities. You may also be able to pay the amount in one lump sum at the end of the year. Before changing the amount due, or the timing of the payment, it’s best to consult with us (or your registered BAS agent) for additional advice to suit your circumstances.

Preparing For Your BAS

Your IAS and BAS can be used to assist in monitoring your business finances. Though you only need to lodge these every quarter, waiting until the due date to get all of the information you require for the statements may cause you to miss out on critical observations (such as how much you may actually owe the ATO).

Daily tracking of your income and expenses can assist in calculating your GST and other liabilities on your BAS, and allows you to ensure that there won’t be any nasty surprises waiting for you.

Here are some tips on how you can prepare for your BAS or IAS this quarter