Small-business tax changes in 2020 you need to know about

Small changes around taxation, reporting and invoicing can have a big impact on the way you run your business, so it’s crucial you get the facts and plan ahead.

We know small-business owners are busy and have many responsibilities, and that’s why we’ve put together this list of some of the changes they should know about.

1. Expansion of taxable payment reporting systems (TPRS)

Small businesses in certain industries are required to report information to the Australian Taxation Office (ATO) about payments they make to contractors.

While TPRS has been applied to the building and construction industry for a while, it has been further extended to road freight, IT, security, investigation or surveillance for the 2019/20 financial year.

It is important to remember it covers the provision of these services by businesses that may not necessarily identify themselves as industry participants.

For example, if a business provides courier services, even if it’s only part of their services, they now may need to lodge a taxable payments annual report each year and include payments to contractors and subcontractors that provide courier services on their behalf.

Talk to your tax adviser to see if you qualify for any of the exclusions and to help you lodge your annual return through the ATO’s online services for agents before the 28 August 2020 deadline.

2. AUSkey will no longer be available after 31 March 2020

The ATO has announced that the AUSkey system, including the “Manage ABN Connections” service, will no longer be available after 31 March 2020.

AUSkey was a way to send business information to the government online. From 1 April 2020 you will need to use myGovID and Relationship Authorisation Manager (RAM) instead.

It might sound complicated, but the ATO says this new process will be a more secure, streamlined and flexible way to report information to the ATO.

For more information about AUSkey’s replacement visit https://www.abr.gov.au/auskey/your-auskey-replacement.

3. Continued rollout of Single Touch Payroll

While the introduction of Single Touch Payroll (STP) has started, if you are looking to set up your own small business and will have employees, it’s important that you begin reporting through STP.

If you have what the ATO calls closely held payees, such as family members working in your business, then you have until 1 July 2020 to start reporting them through STP and you can also choose to report quarterly rather than at the time of their usual pay run.

If you are an existing business which has not yet started STP and does not have an exemption, then expect to be contacted by the ATO. The ATO will also be contacting your tax or BAS agent to encourage you to adopt STP. It is best to adopt STP whilst the ATO is taking a light-touch approach.

4. Use of e-invoicing

According to the ATO, Australian small businesses are owed $26 billion in unpaid invoices and 20 per cent of late payments are due to errors on invoices often associated with manual entry.

For a small business, e-invoicing can mean more cashflow and cost savings with the Government paying e-invoices within five days.

It is approximately 70 per cent cheaper to process an e-invoice, costing businesses around $30 to process a paper invoice, approx. $27 for a PDF invoice, and only around $9 to process an e-invoice.

It is estimated that e-invoicing will save the Australian economy $28 billion over ten years.

If you are unsure about any of these changes or need assistance to make sure you are compliant with payments or lodging, make sure you contact your local accountant today.

Susan Franks, Senior Tax Advocate, Chartered Accountants Australia and New Zealand

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