It’s the eleventh hour and you’ve suddenly realised that tax season is fast upon you. Are you ready for the end of financial year? There may be a thousand questions rolling around in your head right now. What do I need? How do I prepare what I need? How can I set myself up so I can take advantage of all available tax deductions? Perhaps the most important question is; What changes in tax law have occurred over the last 12 months that may affect my small business?
Here at Numble, we have already addressed most of these questions in previous blog posts, but today we will recap by offering an updated quick and complete End of Financial Year (EOFY) checklist.
What do I need to do?
• Review your profit and loss statement.
Take a close look at your income and expenses so you can understand your financial accounts and how your business has performed.
• Get all your financial accounts in order.
Engage a qualified bookkeeper to prepare an accurate and up to date set of financial reports to gain a clear view of your business performance.
• Lodge any outstanding BAS (Business Activity Statement).
This is a given, but you must prepare and lodge all your outstanding BAS before your tax return can be prepared.
• Process Payroll
Make sure that all your pay runs are complete, staff paid, and all payroll reconciliations performed to provide accurate payroll information.
• Perform a stock take (if it’s applicable).
If you have stock as part of your business, then you need to take stock and calculate the value of your trading stock.
• Write off any bad debts.
Any outstanding debts you have can be written off and claimed as a tax deduction. This is also the time to review your debtors and ensure you’ve been paid for the goods and services you have provided.
• Meet your superannuation requirements or prepay for an added tax deduction.
Make sure all the super is up to date – including your own. You risk losing the tax deduction if you don’t get the super paid within the statutory deadlines.
• Get ready for STP (Single Touch Payroll).
Prepare and lodge the STP finalisation. Contact your accountant or bookkeeper to assist, if you’re unsure if you are ready.
• Meet with your accountant to ensure you’ve covered everything.
Consulting a qualified accountant is always a good idea before the EOFY to make you don’t miss any potential tax deductions or deadlines.
Other preparations:
With the growth of your business in mind, here are some additional things you can do to prepare for the coming financial year:
• Review and update your business growth and marketing plan,
• Set your FY23/24 budget,
• Review your business structure,
• Consider your staffing requirements for the coming year.
Understanding your Tax Deductions
They are out there; you need to know what deductions are available to you and how to claim them.
For most small businesses, the most obvious are:
• Cost of Sales
– Materials
– Direct Labour Costs
– Freight and Delivery
• Overhead expenses
– Electricity
– Internet
– Phone
– Rent
– MV
– Depreciation
• Travel expenses
• Other Operating expenses such as:
– Digital technology deductions
– Marketing and Promotion
– Payroll including SG contributions
– Software and hardware
– Assets and depreciation
• Bad debts
• Professional fees
– Accountants, legal and business advice
• Training
– Self-education, staff training and professional development
• Registrations, subscriptions, memberships
• Donations
Always consult your accountant if you are unsure of what you can or cannot claim.
For a more detailed overview of each of the above reminders, you can revisit the following posts from Numble’s Bookkeeping & Finance blog:
What is End of Financial Year Aka EOFY?
Business End of Year Checklist
Setting Yourself up for Success
What changes have occurred?
As you head into the EOFY, one of the most important questions you need to ask, and answer, what tax changes have occurred for small businesses in Australia for 2022/23? Here are some things you need to be aware of that may affect your operations, finances and tax deductions:
1. Changes to Instant Asset Write-Offs: The instant asset write-off threshold has been increased from $150,000 to $200,000 for businesses with an annual turnover of less than $10 million.
2. Changes to Loss Carry-Back Provisions: The temporary loss carry-back provisions have been extended for another year until 30 June 2023. This allows eligible companies to carry back tax losses in the current financial year to offset previous profits and get a refund of tax paid in those years.
3. Changes to Superannuation Guarantee (SG) rate: The SG rate increased from 9.5% to 10% for the first time in seven years on 1 July 2021, and will continue to rise at ½% per year until reaching 12% from 1 July 2025. This means that employers need to adjust their payroll systems and budget for the increased costs.
4. Changes to Cryptocurrency Taxation: The Australian Taxation Office (ATO) has recently issued guidance on how it will apply tax laws to cryptocurrency transactions. Small businesses that deal in cryptocurrencies should seek professional advice.
5. Changes to Company Tax Rates: The company tax rate for small businesses with an annual turnover of less than $50 million has been reduced to 25% from 1 July 2021. However, companies that derive more than 80% of their income from passive investments such as rent, dividends and interest will still be subject to the higher tax rate of 30%.
What changes are about to occur for FY24?
It’s also very important to be aware of what changes are about to occur for the upcoming financial year, so you can take the most advantage. Always good to be prepared!
• Stage 3 tax cuts, new rates and thresholds from 1/7/23
– 19% tax bracket raised from $41,000 to $45,000,
– 32% tax bracket raised from $90,000 to $200,000,
– Top tax rate of 45% eliminated and new rate of 30% for all incomes over $200,000,
– Low Income Tax Offset (LITO) will increase from $445 to $700.
• Super (SG) increasing to 11% from 1st July 2023
• Removal of self-education expenses threshold
• Revised Working from Home expense calculations
• Small Business Technology Investment Boost
Allows small businesses across Australia to spend on technology that could boost or improve their operations.
• Skills and Training Boost
Education, training and practice encourage the development of new knowledge, abilities and competencies.
And finally, here are all the important dates and deadlines you need to know:
| End of Financial Year Key Deadlines: | |
| 21st June 23 | Deadline for May 23 (Income Activity Statement) IAS |
| 25th June 23 | Deadline for Annual Fringe Benefits Tax (FBT) lodgement by Tax or BAS-Agent |
| 30th June 23 | End of FY 23 Financial Year (EOFY) |
| 30th June 23 | Deadline for Q4 super to be received by super funds to allow deduction in FY23 |
| 14th July 23 | Deadline for FY23 Single Touch Payroll (STP) Finalisation |
| 28th July 23 | Deadline for Q4 super to be received by super funds to allow any tax deduction |
| 28th July 23 | Q4 Apr-Jun BAS Logement deadline (non-Tax or BAS-Agent) |
| 25th August 23 | Q4 Apr-Jun BAS Lodgement deadline by Tax or BAS-Agent |
| 28th August 23 | Deadline for FY23 Taxable Payments Annual Report (TPAR) |
You’re now ready to get out there and face another great year.
Need help getting your EOFY paperwork ready? Contact Numble today for expert assistance every step of the way.
