How to do your tax return if you closed your doors due to Covid-19.

The events of the last twelve months have been unprecedented, presenting unexpected and difficult challenges for people and businesses all over Australia. For small businesses owners, this was especially tough. With the end of the financial year approaching, you may be wondering how to navigate your tax return if you had to close the doors to your business temporarily or permanently due to the pandemic.

In today’s guide, we’ll give you the information you need to complete your small business tax return.

If you had to close your business temporarily.

Not all small businesses were able to continue operating during lockdowns and, while social distancing restrictions were in place, chose to pause their operations instead. If this is you, then you don’t need to cancel your ABN and GST registration. This applies even if your business had to close its doors for lengthy stretches of time.

The ATO will need a number of records relating to your businesses, including any sales you’ve made, payments to employees, and payments to other businesses.

You will still need to meet your tax and super obligations as normal. This may include:

  • Fringe benefits tax
  • Pay as you go (PAYG) withholding for employees
  • Upper guarantee for your employees
  • Income tax
  • GST

It’s worth noting that Covid-19 tax relief is available for eligible businesses, including deferring tax payments for up to four months. For more information, visit the ATO website.

RELATED: Tax relief for businesses affected by Covid-19.

If you had to close your business permanently.

Closing a business comes with a specific set of tasks and obligations that need to be finalised. You’ll need to prepare your final accounts, income tax return and activity statements. If you report your tax through STP, you’ll need to finalise all that data; otherwise, you’ll have to lodge a payment summary annual report.

Cancelling your ABN should only happen once all your tax affairs have been finalised. The ATO asks that you lodge your final business activity statement (BAS) before permanently closing your business.

You must apply to cancel your GST registration within 21 days of stopping your business activities should you decide to permanently close your business. Doing so may affect some or all of your other registrations, like fuel tax credits, luxury car tax, and wine equalisation tax.

You will also still need to meet your tax and super obligations as normal. This may include:

  • Fringe benefits tax
  • Pay as you go (PAYG) withholding for employees
  • Upper guarantee for your employees
  • Income tax
  • GST

RELATED: Toolkit: Key dates for the Australian tax year.

Super obligations.

Whether you’re pausing or permanently closing your business, you will still need to pay the minimum amount of super for your employees. This should be paid into the correct fund by the due date. Failure to do so may result in you having to pay a super guarantee charge (SGC). If you’re unable to pay the full amount, then paying as much as you can will help to reduce the SGC charge.

If you think you won’t be able to meet your tax and super obligations, then call the ATO on 1800 806 218 or speak to a tax professional as soon as you can to discuss your situation and help you find a solution.

*We endeavour to provide accurate material for Australian businesses consistent with Australian laws; however, this material is for reference only and is not designed to be, nor should it be regarded as professional advice.