4 tax boost opportunities for franchisors
There are new government schemes and initiatives that franchisors could benefit from this new financial year, writes Vaughan Fergusson, founder of Vend.
The dawn of a new financial year provides an opportunity for retail franchise business owners to take stock of their operations and performance, reflect on what has worked and identify areas for improvement.
This year, with the new financial year arriving under the cloud of economic instability, money is probably at the forefront of minds more than ever before. If, like many other retail franchise business owners, you’re compiling your own tax return ahead of October’s deadline, there’s a lot to consider.
Unless this is your first tax season as a franchise owner, it’s likely you already know the deductions and schemes you’re eligible for.
However, as we begin to emerge from perhaps some of the most challenging few months many franchise owners have ever experienced, it’s also important to make note of the new schemes or initiatives that have been introduced in response to the coronavirus pandemic to determine whether you might be eligible for an additional cash boost.
Here are four of those new or updated initiatives that could provide you with a welcome tax boost this financial year.
Working from home expenses
As a result of coronavirus restrictions, many franchise owners found themselves managing their stores, ordering new stock, and generally working from home more frequently in recent months.
In response, the government introduced a temporary shortcut method for calculating additional expenses incurred while working from home with minimal record keeping requirements.
This shortcut method allows business owners to claim 80 cents per hour for additional expenses incurred from 1 March 2020 until 30 September 2020, including electricity, phone and internet, stationary and home office equipment.
This means that any additional expenses incurred from 1 March to 30 June 2020 can be included in your upcoming tax deduction, so be sure to include them.
Instant asset write-off
Eligible businesses are also able to claim immediate deductions on the business portion of the cost of an asset in the year it is first used, or installed ready for use.
In response to the pandemic, the government increased the threshold of this instant asset write-off from $30,000 to $150,000 for eligible businesses from 12 March 2020 until 31 December 2020.
In addition, eligibility was also expanded to cover businesses with an aggregated turnover of up to $500 million. So, if you recently bought a new delivery van to focus on online orders while your physical store was closed, include the expense in your tax deduction.
Salary and wage expenses are a type of operating expense so, if you have employees, check to see whether you might be eligible to claim a deduction for their salaries, wages and super contributions.
Any payments your business received under the recently introduced JobKeeper program are taxable income, yet the costs you paid out to staff in wages are deductible. The deductions you can claim depend on the type of business you operate, so make sure you know what you’re entitled to.
Backing business investment
With the aim of supporting business investment and economic growth, the government also recently introduced a backing business investment initiative. This scheme provides a 15-month window of investment incentive by accelerating depreciation deductions from 12 March 2020 to 30 June 2021.
Eligible assets include new depreciating assets such as buildings and equipment, and specific intangible assets such as patents.
Even in a normal year, the tax season can bring headaches and stress for franchisees. Understandably, however, it can be even more stressful in times of economic instability. However, by being well-versed in the new government initiatives, you could find yourself with an extra cash boost and added momentum heading into the new financial year.
Disclaimer: Vend does not provide tax, legal or accounting advice. This article has been prepared for informational purposes only, and is not intended to be relied on for tax, legal or accounting purposes. You are strongly encouraged to consult your own tax, legal and accounting advisors to determine how the information may relate to you or the specifics of your business.