Like clockwork, every year, the countdown begins as 30 June approaches. Yes, there's a lot to organise during tax season. And yes, it can be a really busy and stressful time. But take it from us, the clock doesn’t stop and it pays to stay alert at this time of the financial year. Find out how to get your business ready for the end of a financial year with this handy guide to tax planning strategies and your tax compliance obligations. Our tips and strategies can help you achieve a great tax result.
Stay On Top Of Your Tax Compliance This EOFY
It feels like every year, the ATO announces that they’ll be focusing on things like ‘addressing common issues...when small business lodge their returns and reinforcing our message around recordkeeping and claiming of expenses’. In fact, in many recent federal budgets, funding for the ATO's anti-avoidance programs have been boosted.
This means they’re paying close attention to your business’s expense claims. What should you be careful of?
- Claiming private expenses in your business
- Misunderstanding your business structure’s tax obligations
- Omitting your business’s income
- Not providing the right records for substantiating your expense claims
When claiming expenses for your business, it’s really important to make sure that the expense has only been incurred by your business. If the expense covers both business and personal use, make sure you're only claiming the business portion. And be sure you’re keeping accurate records of your expenses to substantiate your claim.
Tax Planning Strategies To Save your Business Money
They say nothing is certain but death and taxes. That might be true, but it doesn't mean you should be paying more tax than necessary. There are legitimate and legal ways you can reduce your business’s tax liability. It’s all about reducing income, increasing deductions and tapping into lower tax rates.
Some common strategies include:
1. Paying Your Staff a Bonus
There’s no better feeling than rewarding your staff for their hard work for the financial year. Did you know that you can calculate and book your bonus payments prior to 30 June and claim a tax deduction, even if you don’t expect to pay the bonus until the next financial year payrun? Everyone wins!
2. Writing Off Your Bad Debts
Here’s one silver lining of never getting paid. Your business is entitled to a deduction for bad debts. So an easy way to increase your deductions is to review and write off any bad debts for the year. If, however, this debt is later recovered, it must be included in your assessable income.
3. Reviewing Your Inventory
It’s stocktake time! An easy way to identify further deductions it to review your inventory at the end of the financial year. If you have damaged, obsolete or slow-moving stock, you could write it off and claim the deduction instead of valuing it at its full price.
4. Making Super Contributions
You know what’s really super? That you can claim tax deductions for super payments you make on behalf of your employees. Under the super guarantee charge, the rate for super contributions is 11%. Tax deductions for super contributions will only be available in the current tax year if the contribution is received by the fund by June 30, so get cracking to make those payments in time and ensure you leave enough days for payments to process.
Key EOFY Lodgment Dates For Small Business
Make sure you’re compliant this season by staying on top of these key dates for your business:
- June 30: Wrap up your books for the FY that began on 1 July in the previous calendar year
- July 1: Single Touch payroll is required for all businesses
- July 7: Employee Share Scheme statement sent to your employees
- July 14: Employers must issue PAYG withholding statement summaries to employees
- August 14: PAYG withholding payment summary annual report due
- August 14: Employee Share Scheme annual report
- August 28: Taxable payments annual report due
How To Get The Best Possible Tax Return For Your Business This Financial Year
It’s a good idea to be across the common tax planning strategies available to your business so can take advantage of the quick wins this tax season. It’s also really important to make sure you're complying with your tax obligations so you don’t risk hefty penalties from the ATO.
But we’ve only just scratched the surface. If you need advice on how to reduce your tax liability this EOFY, get in touch with your BlueRock Advisor. We can help you stay on top of your compliance and get the best possible tax return this EOFY. Bring it on!
