Checklist for EOFY Tax Return Filing
The 2019-2020 financial year is about to end. Have you wrapped up your books and started finalising your tax time paperwork and accounting yet?
EOFY is a yearly report of business income or loss and a chance to claim deductions. The Australian financial year starts on 1 July and ends the next year on 30 June. The tax return filing is due by 31 October of each year (or three months after the EOFY).
During this period, businesses need to complete bookkeeping and tax return filing before planning for the new financial year.
If you’re a new business owner, preparing for the EOFY including the tax return filing can get overwhelming. Even if you have someone in the company who takes care of the financial aspects and taxation, you still need to understand how these matters work. Your tax professional can help you understand any changes. You can also keep up-to-date by subscribing to the ATO’s small business newsroom.
Here’s a checklist of what you need to do to stay organised and level-headed.
1. Get the latest updates on with tax changes
Heed to the official website of the Australian Taxation Office (ato.gov.au), the government website for the Australian business community (business.gov.au), and other credible news organisation websites for the latest updates on taxation and tax return filing in Australia. You can also subscribe to these organisations’ newsletters and follow their social media pages to get the latest updates.
Visiting these sites regularly will let you know of any tax changes, especially those that affect your business like deductions or concessions for small and medium enterprises (SMEs).
For instance, the federal government first set the $150,000 instant asset write-off threshold to end this month, but it was later announced to be extended until the end of the year. This gave more businesses the chance to claim tax deductions on assets, including commercial vehicles, that are below $150,000.
Learn more about buying a car under the $150,000 instant asset write-off threshold now.
2. Reconcile your payroll
Make sure that your accountant or employee who’s in charge of the tax return filing has kept a record of all staff payments by the end of June and that all outstanding invoices from contractors or freelancers are paid.
Ensure that your employees have their payment summaries by 14 July each year so their tax returns are filed promptly and accurately.
Review the payroll tax rates and threshold in your state, as well as the salaries of your staff to make sure that they’re in line with the appropriate awards and regulations.
3. Review your inventory
Do a rundown of all the assets and investments your business has.
Do you have a stock that you can claim a tax deduction for? Do you need to sell some assets to offset losses? What equipment and machinery do you need next year or in the near future?
If you have a use for these assets in the future, It might be worth pre-ordering and paying for them now to include them in your tax deduction claims.
4. Complete all the paperwork
You’d likely understand the significance of hiring a professional to organise your business and prepare your taxation requirements until you realise how time-consuming it is to prepare and all the needed documents and paperwork, such as:
- Stocktake record (A record of the manual checking of all the inventory that your business owns)
- Summary of income and expenses in a profit and loss statement
- Record of your debtors and creditors
- Records of asset purchases or expenditure on improvements
- Income tax returns documents, including fringe benefits tax and goods and services tax
- Payment summaries
- Superannuation documents
- Digital copies and backups of all paper records
5. Know the tax deductions and concessions you can claim
There are are a lot of business expenses that you can claim a tax deduction for, including:
- Commercial vehicles
- Office equipment, tools, and machinery
- Diesel fuel use
- Set up of your own website
- Running a business from home
- Travel expenses
Just make sure that you have the purchase records to prove the expenses you’ve made.
If you’re a sole trader, you can use the ATO’s myDeductions app to conveniently record your business income and expenses during the year.
If you can, write off any debts or assets before the financial year ends to claim a tax deduction on them.
See if you can make use of some tax concessions for small businesses before the end of the financial year.
Lastly, know the payroll tax periodic return that captures taxable wages paid during the return period:
- A designated group employer is eligible for a fixed periodic deduction based on the total taxable wages that the group pays.
- A group member but not a designated group employer is liable for payroll tax on the full amount of the taxable wages.
- Anyone that is not part of a group who pays between $1.3 million and $6.5 million in taxable wages can claim the actual periodic deduction if paying Queensland wages and fixed periodic deduction if paying interstate wages.
6. Avoid tax refund scams
There are scams that target small business, especially around tax time. These include:
- Overpaid tax scams. The scammer claims that you’ve overpaid your taxes and are eligible for a refund. However, you need to pay a fee for administration or transfer costs.
- Underpaid tax scams. The scammer claims you’ve underpaid your tax and need to repay it immediately. To pay, you need to provide your credit or debit card details, wire the payment through a money transfer, or purchase iTunes cards and send them the details of the cards (Silly, but it has victimised some unknowing business owners).
To avoid scammers, ensure that your tax agent is registered with the Tax Practitioners Board (TPB). You can search their names on the TPB register or look for the registered tax practitioner symbol on their website or business cards.
The registered tax practitioner symbol includes the type of registration and their individual registration number. Any bogus registration number can be easily identified.
7. Review your finances
Work alongside your accountant or bookkeeper to review your business finances and then develop a cash flow forecast.
Some guide questions include:
- Did you meet your sales targets this financial year?
- What can you do next financial year to improve your cash flow?
- What are the potential shortfalls?
- Do you need to take out a business loan to fix a cash flow gap?
Your cash flow goal is to earn more money while being able to pay your staff and suppliers at the same.
8. Review your business and marketing plans
EOFY is a great time to review and update your business plans. Doing so will help you:
- Set goals and priorities
- Re-assess business strategies
- Prioritise and maximise work processes
- Adapt to business changes
- Pursue new opportunities
9. Review your business structure and insurances
You may need to restructure your business as it grows, and then review the possible changes in your compliance and taxation regulations that the restructuring brings.
As for business insurance, you may need to update your level of cover if your business circumstances change. Always check the product disclosure statements (PDS) for your insurance policies to know the extent of your coverage.
To get the best deal from an insurance company, work with a trusted broker.
10. Backup and secure your files
You’ll never know what the future brings. In the worst circumstances, a flood or fire could consume all your important documents to oblivion.
Keep you financial and tax-related documents—like financial information, registrations, and consumer data—safe by having digital copies of them and backing them up on a secure dedicated server. For business information and documents on papers, storing them in a secure off-site location is a smart move.
The earlier you complete bookkeeping, tax returns, and financial plans for the new financial year, the smarter you become in the decision-making process and the more efficient and profitable your business runs.