Taxman offers advice to SMEs impacted by COVID-19.

 

The Australian Taxation Office (ATO) has reminded businesses “doing it tough” as a result of COVID-19 that they have a range of options including claiming a deduction for losses. 

 

ATO assistant commissioner Andrew Watson said: “We know some small business owners are under incredible amounts of stress and facing uncertainty like never before. We understand your tax obligations may not be at the top of your list of things to do. So if you need some extra help with your tax and super affairs, I urge you to contact your registered tax professional or the ATO.” 

 

The ATO anticipates that in 2019–20 and 2020–21, a number of businesses that would ordinarily be turning a profit may be making a loss due to COVID-19, possibly for the first time. “If you find yourself in this boat, you may be able to claim a deduction for the loss. It’s crucial that you keep proper records to ensure you can claim the deduction you’re entitled to,” Watson said.

 

Sole traders and individual partners in a partnership who meet certain conditions can offset current year losses against other assessable income (such as salary or investment income) in the same income year. Otherwise, they can defer the loss or carry it forward and offset it to a future year when the business next makes a profit. 

 

Businesses that are set up under a company structure that have made a tax loss in a current year can generally carry forward that loss for as long as they want and claim a deduction for their business in a future year. 

 

The ATO also acknowledged that some businesses may need to close their doors – either temporarily or permanently – due to COVID-19, particularly in Victoria. 

 

“If you have to close your business permanently as a result of COVID19 or for any other reason, there’s a few things you’ll need to do, like lodge any outstanding activity statements and instalment notices, make GST adjustments on your final activity statement and lodge final tax returns – so we can finalise your account and issue any refunds that might be owed to you,” Watson said.