The report was conducted in partnership with Small Business Australia, a respected advocacy group for SMEs, to identify the key issues that are causing Australian small businesses continue to struggle in the post Covid era.

Ahead of the 2023 Federal Budget on 9 May, the SW & SBA Business Sentiment survey is open once again. We are asking sole traders and owners and managers of SMEs to share their experience and add their voice to help us understand the issues on the ground. If you would like to take the survey, click here.

Upcoming event for Small Business

Opportunities for growth, investment and trade are critical to everyone’s success, so SW Accountants & Advisors has once again partnered with Small Business Australia (SBA) to get to the heart of what business is looking for from the Budget, come Tuesday 9 May 2023. Take the survey to tell us what you need from the budget and sign up for our Budget Breakfast webinar as ANZ, SBA and SW experts unfold the Budget for you.

The post Greg Will talks to media about current issues for Australian businesses appeared first on SW Accountants & Advisors.

A ‘Small Business Sentiment’ survey conducted by SW Accountants & Advisors in partnership with Small Business Australia has revealed insights into the struggles and hardships faced by SMEs in Australia, with 30% of the 400+ businesses that responded indicating they would find it difficult to meet their financial commitments through 2023.

“This survey provides a clear picture of the challenges faced by SMEs in Australia, and the urgent need for government support. As we head into the May 2023 Budget, it’s clear that SMEs need help as they juggle increasing business costs, cash flow, managing employees, hybrid work policies and work-life balance,” said small business specialist Director of SW Accountants, Greg Will.

Top 5 issues for SMEs

Mr Will, who has over 20-years’ experience in helping SME’s manage and grow their businesses, said that in addition to the ongoing financial struggles that the survey also uncovered the top 5 issues faced by small to medium business owners:

1. SMEs need help with employees, including attraction, retention, incentivisation and wage pressures
2. Managing cash flow is critical, including budgeting, forecasting, and access to capital – debt or equity
3. Businesses face a cost of doing business increase, including all costs like wages for staff, running costs, rents, etc., without being able to pass on higher prices on sales, leading to margin pressure
4. SME owners need more time in the day to do everything, which is leading to work-life balance issues, mental health problems, and frustration
5. White-collar SME businesses are struggling with work-from-home or work-from-the-office policies, leading to hybrid work policies as the fifth priority for 2023.

Other significant findings from the Small Business Sentiment survey included the impact of the change to minimum wage, the ability to meet financial commitments, supply chain disruptions, and business reliance on migrant labour.

Sector insights

The report broke down into specific sectors showing that half (50%) of the businesses in Accommodation and Food Services, Education and Training, and Manufacturing are impacted by the change to minimum wage increases, leading to increased financial pressure. Additionally, a whopping three-quarters (76%) of Manufacturing respondents believed their businesses are weaker now than before the COVID pandemic due to supply chain and skilled labour shortages.

The survey also highlighted that despite a slight easing of supply chain issues as we head into 2023, 43% of those in Construction will struggle to meet their financial commitments, which will continue to have significant impacts on housing, whilst staff shortages continue to remain a significant issue for the manufacturing and construction sector.

Bill Lang, Executive Director of Small Business Australia says: “The Small Business Sentiment survey has highlighted the struggles faced by many SMEs in Australia and the urgent need for sensible and stable government policies to support this sector in 2023. SW and SBA will continue to advocate for the needs of SMEs and provide expert guidance and support to ensure their survival and growth in 2023.”

This survey is the first of its kind, with SW and SBA planning to conduct another deep dive across all sectors to compare results from last year ahead of the budget in May 2023. The findings of the survey will provide a foundation for SMEs to advocate for their interests and highlight their struggles with the federal government and policy makers.

Upcoming event for Small Business

Opportunities for growth, investment and trade are critical to everyone’s success, so SW Accountants & Advisors has once again partnered with Small Business Australia (SBA) to get to the heart of what business is looking for from the Budget, come Tuesday 9 May 2023. Take the survey to tell us what you need from the budget and sign up for our Budget Breakfast webinar as ANZ, SBA and SW experts unfold the Budget for you.

Media contact

Amanda Lee, SW
Head of Business Development & Marketing

E alee@sw-au.com
P +614 30 322 206

About the survey

About SW

About us – SW Accountants & Advisors (sw-au.com)

As an independent, national firm with a strong presence across Brisbane, Melbourne, Perth, and Sydney, SW offers a wide range of accounting and business advisory services. With 40 Partners and 300 staff, we are committed to delivering exceptional value to our clients. We are proud to be ranked as the 22nd largest firm by revenue in the 2022 AFR Top 100 Accounting Firms and the 10th largest national practice in Australia.

At SW, we believe in building real relationships and connectivity, both locally and globally. As a member of the SW International network , we provide integrated global services to our clients. Our international headquarters are located in Hong Kong, and our member firms offer assurance, business advisory, corporate finance, and tax consulting services. Additionally, we are a member of the Praxity Alliance, which enables us to leverage our combined global footprint and connections in over 110 countries across the USA, Europe, Asia Pacific, and the Middle East.

About Small Business Australia

Over 5 million Australian own or work in small businesses. Small Business Australia’s purpose is to ensure a thriving sector and financial security for these 5 million Australians. Small Business Australia conducts research with small businesses across Australia and provides information, advice and services to small businesses and the major organisations that support them. The Foundation Partners in Small Business Australia’s Buy Local movement include Australia Post, Nab, Telstra, PEXA and SW.

Greg Will
Director, Private Business and Advisory Services

Bill Lang
Executive Director, Small Business Australia

The post 1 in 3 SME’s will struggle to meet their financial commitments in 2023 report appeared first on SW Accountants & Advisors.

One of the significant changes introduced by the ATO is the discontinuation of the 80 cents per hour pandemic shortcut method, which was available since 1 March 2020. Commencing 1 July 2022, taxpayers can claim a deduction for their actual expenses or opt to use the revised fixed-rate method of 67 cents per hour for each hour worked from home during the tax year. The revised fixed-rate method covers expenses such as electricity, gas, phone usage, internet, stationery, and computer consumables. ATO has also required more record-keeping documents to prove your WFH hours.

What you need to know

The ATO has advised taxpayers to keep accurate records of their hours worked from home during the income year and invoices or bills in the name of the homeowner or service recipient as evidence of additional running expenses incurred. It is imperative to note that to claim WFH deductions, taxpayers must work from home to fulfil their employment duties, and not just carry out minimal tasks such as checking emails or taking calls.

It is worth noting that assets and equipment such as a computer or similar electronic device, desk, and office chair that often provide taxpayers with more substantial deductions are not included when using the revised fixed-rate method and need to be claimed separately.

PCG 2023/1 relaxes the ATO’s approach towards home offices, and taxpayers are no longer required to have a separate home office or a dedicated work area set aside in their homes to claim WFH deductions. However, if multiple individuals are working from home simultaneously and claim the actual cost method, they must apply an appropriate apportionment methodology to isolate individual components of the expenses incurred.

WFH calculations and proof

The ATO has announced that from 1 March 2023, they will take a stricter approach to record-keeping, requiring taxpayers to provide records as they occur, such as timesheets, rosters, logs of time spent accessing employer systems, or a diary of the full year to substantiate their WFH hours. The ATO will no longer accept estimates or four-week diaries from that date.

These revised deduction methods will significantly impact individuals working from home who claim tax deductions for expenses incurred during that time. Accurate record-keeping of WFH hours and related expenses is crucial to ensure that deductions are appropriately claimed. In case of any queries, taxpayers are advised to contact their tax professionals or the ATO directly.

Click here to find out the details of different calculation methods and what are the common mistakes when making WFH claims in our previous article.

How SW can help

• Provide further information and discuss which method suits your circumstances best
• advice around how to ensure the maximum tax benefit is obtained with minimal administration workload
• review expenses incurred and advise which expenses are eligible and can be claimed
• provide assistance with determining the useful life of assets and assist with calculating decline in value of work related items
• assist in calculating work related claims using the two methods and provision of workpapers to support the claim in the event of an audit
• help ensure that you have the necessary evidence and records to support your claims
• minimise any compliance risks.

If you have any queries about the revised deduction methods for work from home expenses or PCG 2023/1, please contact your SW representative or check out the key contacts provided.

Contributor

Tom Warrington

Justin Batticciotto

The post Work from home – ATO revised deduction methods appeared first on SW Accountants & Advisors.

Careful consideration, planning and record keeping should be undertaken throughout this financial year in respect of work related home office expenses in order to maximise the deduction at year end.

Examples of WFH deductions you may be able to claim

• Heating, cooling and lighting
• Telephone call and phone rental costs relating to landline and mobile phones
• Internet data costs
• Decline in value of furniture and fittings such as desks, chairs, shelving and cupboards which you use for work-related activity
• Decline in value of office equipment such as computers, laptops, tablets, smart phones and printers which you use for work related activity
• Computer consumables such as printer ink and stationery
• Costs of repairs to home office furniture and fittings
• Home office cleaning expenses.

The rules:

• Expenses incurred must be directly related to work;
• Must have been paid out of own pocket; and
• Cannot have been reimbursed by the employer.

What has changed?

From 1 March 2020 to 30 June 2022, an actual home office is not required in order to claim home office expenses. 

Prior to 1 March 2020, a home office was required to be a designated room or area in the home set aside just for work, not shared by other people and not used for other purposes.

The ATO will now allow home office expenses to be claimed when working from the kitchen table or from a sofa.

Methods to calculate your WFH claim

1. Shortcut method

Using the short cut method, a tax deduction of 80 cents can be claimed for each hour worked from home.

This method covers costs such as:

• Electricity and gas
• Telephone
• Internet
• Decline in value of equipment and furniture.

This method is suitable for those working from home, without a dedicated home office space and making do. 

If there are multiple individuals working from home, each individual can claim 80 cents per hour. This includes both members of a couple living together.

2. Fixed rate method

Using the fixed rate method, a tax deduction of 52 cents can be claimed for each hour worked from home.

This method covers costs such as;

• Electricity and gas
• Decline in value of furniture and fittings
• Repairs to your home office equipment, furniture and furnishings
• Cleaning.

To use this method, you must have a dedicated workspace in your home. 

After claiming using the fixed rate, a claim for telephone, internet and decline in value of technology items, stationery and computer consumables can also be made.

3. Actual cost method for home expenses

Using the actual expenses method, the claim is calculated by calculating the actual expenses incurred to produce income when working from home.

This may include the following expenses:

• Electricity and gas
• Decline in value of furniture and fittings
• Decline in value of decline in value of telephones, computers, laptops or similar devices
• Phone expenses
• Internet expenses
• Cleaning
• Computer consumables and stationery.

For example, any electricity costs claimed will need to be calculated by looking at the cost per per kilowatt of power and the number of hours used for work related purposes. Similarly, telephone expenses bills will need to be itemised. Calls and data incurred specifically for work related purposes will need to be summarised.

Common mistakes made when calculating WFH claims

• Not apportioning shared bills.  Mistakenly individuals often claim the entire monthly bill even though the cost of that bill is shared with others.  For example, if the monthly internet bill is $100 and it is shared by two individuals, the claim is then $50 per individual and not the full $100
• Not having a good understanding how the depreciation rules work.  Assets purchased such as desks, chairs, filing cabinets, computers and printers have different “working lives” therefore, specific depreciation rates should be applied
• Claiming home office expenses when there is not a dedicated room or office in your home
• Claiming a too high a work-related proportion for a particular type of expense.  For example; the personal use of telephone or internet should not be claimed
• Not keeping appropriate records to substantiate the expense
• Not making a WFH claim when you are entitled to .80 cents per hour. This adds up.

What should you do prior to year end in order to maximise WFH claims

• Keep record of the number of hours worked from home each week over the financial year.  This could be a diary or timesheet; and
• Keep receipts for all eligible expenses so each method can be considered to work out the highest claim.

How can SW help

• Provide further information and discuss which method suits your circumstances best
• Advice around how to ensure the maximum tax benefit is obtained with minimal administration workload
• Review expenses incurred and advise which expenses are eligible and can be claimed
• Provide assistance with determining the useful life of assets and assist with calculating decline in value of work related items
• Assist in calculating work related claims using the three methods and provision of workpapers to support the claim in the event of an audit.

Contributors

Janelle McPhee

The post What can you claim working from home? appeared first on SW Accountants & Advisors.