EOFY is once again around the corner, and we encourage business owners to be proactive. Talk to your accountant, look at your books, and make any little adjustments needed before June 30 hits. This will have optimal results for next financial year. So let’s get planning!
Over at Optimised Accounting, we just went through our tax planning time. If you were one of our business clients, we would invite you in for a chat over video or in person to discuss how you are tracking financially, what to expect when we prepare your annual tax return, and if there’s anything we suggest you should do before EOFY. We are able to have these meetings because we are (almost) always up to date with clients tax obligations and have a clear picture of how you look.
If you don’t have a Business Accountant like us taking care of you, here’s a list of things to consider or seek advice on:
Business taxes
Changes in 2023
This financial year marks the end of a few incentives which you’ll want to catch onto before they’re phased out, and a few new ones you’ll want to jump on right away:
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- Instant Asset Write Offs: up until now, you could immediately deduct assets acquired from 6 October 2020 at full value, regardless the cost (well… up to $150,000). After 1st July 2023, this will phase out. Find out in our video what to do to make the most of it before EOFY.
- Electric Vehicle Concession: purchasing an electric vehicle up to the value of $84,916 for your employees does not attract FBT, meaning you could save up to $7,520 each year.
Watch our video for how this works. - Loss Carry Back
2023 is the last year where the company loss carry back, allowing loss companies to receive a refundable cash tax offset for the tax that was paid in prior year(s) after 2019. - Energy Incentive: deduct more from your electricity-efficient assets, up to $20k!
Have a read in our article whether your business will be eligible. - Training and Digital Transformation Costs
You may be eligible for an additional 20% deduction on expenses for the purpose of external training provided for your employees, as well as a 20% deduction on eligible purchases and depreciating assets for digitising your processes.
Checklist:
Delay incoming invoices
If there are any incoming invoices you’re awaiting payment on for your products or services, consider delaying them until after 1st July if cashflow allows.
Where payment has been received in advance of completing the work you owe your clientele, the income may be assessable in the year the services are delivered or work completed.
Lodge and pay your existing tax obligations
Now is a good time to check that your quarterly BAS, your PAYG, and whatever else you are required to report (and pay) to the ATO is up to date.
Bring forward expenses
If you are in a position to do so, bring forward any expenses. This means if there is a work expense that you know is pressing but you have put it off, go ahead and organise it now. You will then be able to claim the deduction in this financial year rather than wait until next year.
If you’re working from home, may have upgraded your home computer or invest in new office furniture. Making your purchases before the end of the tax year will not only impact your tax sooner rather than later, but you can take advantage of EOFY sales.
If you have any invoices that are due before June 30, pay them so they are included in your records.
Cut back on unnecessary items
While you are looking at your finances, it’s is a good time to evaluate your income and expenditure. Now is the perfect time to look at your insurances, utilities and expenses, and see if there are any that are no longer relevant and cut back on what you can, or contact your provider for a better rate.
Write off bad debts
Review your outstanding invoices prior to 30th June to identify any bad ones. If you have chased them up already a few times and it looks unlikely they will be paid, simply write it off.
Do a stocktake
If you are a product based business, identify and dispose of any obsolete, slow-moving or damaged stock so you can claim a tax deduction for the write-off.
EOFY Payroll
In previous financial years, it was necessary to give each employee a PAYG Payment Summary outlining the income & tax they have earned throughout the year so they can lodge their tax return. With the rise of online technology and Single Touch Payroll, for most businesses this is no longer necessary.
You do however need to make sure all your pay runs have been posted, and your STP has been filed. This is so that all information can flow through to the ATO.
If we handle your end of year payroll, continue posting and filing your payruns as normal and we handle your STP finalisation.
Employee superannuation
From the 1st July 2023, the superannuation guarantee rate will increase from 10.5% to 11%. Every year it will rise by a further 0.5% until it reaches 12% in the 2024-2025 income year.
Your employees superannuation is due at 4 times throughout the year (July, October, January and April).
It is very important that these are each paid on time, as the ATO will crack down on late payments. Even one day late can result in a fee. (It is also unfair to your staff to have unpaid super, but we don’t need to tell you that).
If you have any outstanding super payments, it’s time to process these.
In order to get the deduction, payments must reach super accounts before 30th June 2022, which means you will need to transfer by 14th June to allow time for processing.
Consider a business restructure to make the most out of your finances
Here at Optimised, we love a restructure. This is because we want to ensure all business owners are structured in the best way for them. Having the correct business structure can ensure you are protected in the future should anything happen.
Watch our recording on how business structures work. Please let us know if you’d like a meeting to discuss.
Run your business as a company?
Remember that there is a line between your personal finances and those of your company.
If you have taken funds out of the company that haven’t been declared as a dividend or wage, those funds may be sitting on the company accounts as a loan to you from your company. Ensuring this is considered and handled appropriately means you’ll avoid being taxed twice on the same income!
Reconcile Xero
And, of course, ensure your Xero is reconciled. 🙂
Personal taxes
The end of LMITO
Be prepared for your personal tax to be $1500 worse this year, since the Low and Middle Income Offset is phasing out. This incentive gave tax return relief for several years, which gave you either a boost or less of a repayment to make. Watch our video on what to expect and how to best prepare for this change.
Do you need finance?
One of the major things that clients bring up at tax planning sessions, is that they are looking at buying a new rental property or new car, and will need finance soon.
It’s important in these cases especially to be up to date and to let your Accountant know asap.
Want to boost your own super?
If you’re considering adding some extra superannuation into your account, now is the time to do so.
There are many ways of growing your super to think about, including;
- Making tax deductible contributions.
(If you are paying your Super through Xero, you will need to do so by 24th June to allow time for processing).
The super must hit your Super account by 30th June 2020.
If you are making a super contribution you also need to fill in an intent to claim form which can be found here. - Salary sacrificing up to your $25,000 annual cap.
- The low income super tax offset is available to those who earn $37,000 or less a year, and means that if you or your employer contribute to your super, you may be eligible for a tax offset of up to $500 per year.
- The spouse contributions tax offset means you may be able to claim an 18% offset (maximum of $540 offset) on contributions up to $3000, that you make on behalf of your non-working or low-income-earning partner.
Consider your personal tax
Now is also a great time to review your personal tax preparations for 30 June.
Look at personal tax decisions such as additional superannuation contributions, getting a depreciation schedule drafted for your property and making sure you can substantiate any work related or investment expenses that you may have.
Cryptocurrency
If you’ve dealt with crypto at all this financial year you need records of everything. The ATO has a special taskforce dealing specifically with cryptocurrency.
It is considered an asset for tax purposes, rather than a form of currency.
This means that gains or losses made on disposal or exchange of cryptocurrency will often be captured under the tax system – regardless of whether you’re switching between currencies or ‘cashing out’ your asset into AUD.
You will need to keep records of all of your trades in order to work out whether you’ve made a taxable gain or loss.
Talk to your Accountant
If your Accountant has offered a Tax Planning session, this could be quite beneficial so it’s worth doing this if available.
The featured image above is copyright Xero.
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