EOFY Tax Tips & Reminders

In this piece, we'll cover some crucial points to consider when it comes to filing your taxes, as well as provide a few helpful ideas on how to make the process as smooth and stress-free as possible. There are a few things you should keep in mind as the end of the fiscal year draws near to ensure you're making the most of all the tax breaks and benefits available to you.

We'll offer some advice on how to maximise your tax status in this blog post. We'll also make sure you remember some important deadlines and dates that you don't want to forget. Listed below are some pointers and reminders to make the procedure go as smoothly as possible.

Review the Australian Taxation Office (ATO) website next to learn more about the types of deductions you can make.

By taking these easy steps, you can reduce any potential headaches at tax time!

Tax Advice & Reminders for EOFY

Because to the effects of COVID-19, this year has likely been the most challenging year in the history of small business owners.

Because of this, tax planning for 2020 and important actions before June 30 are more important for this year than they were for any other year in the past.

As a business owner, there are various duties that you need to examine and take action just before and after 30 June.

Some of these will help to minimise your tax. Your risk of being audited by the ATO will be reduced thanks to others.

If You Don't Fulfil Your Tax Obligations, There Will Be No Tax Deduction

From the 1st of July 2019, taxpayers will no longer be able to claim a tax deduction for the following types of payments if they have not fulfilled their PAYG withholding and reporting obligations to the ATO:

• compensation received by an employee in the form of salary, wages, commissions, bonuses, or allowances
• of Director’s fees;
• to a person who actively practises religion;
• as part of a labor-hire agreement; or
• services for which the supplier does not supply an ABN.

You may still be entitled for a deduction even if you make a mistake and voluntarily correct it before the ATO conducts a review or audit; however, fines may still apply if you failed to withhold the proper amount of tax from your earnings.

Amounts Paid to Contractors

Payments to contractors working in specified industries need to be reported to the ATO by 28 August 2020. This report on taxable payments is required for the following reasons:

• Services related to building and construction
• Janitorial services
• Delivery services
• Transportation services
• Information Technology (IT) services
• Providers of security, investigation, and monitoring services
• Services that are a mix (providing one or more of the services listed above)

Amnesty for violations of the Superannuation Guarantee (SG)

The Superannuation Guarantee (SG) Amnesty offers a one-time chance to admit prior rules violations and settle unpaid superannuation guarantee charge sums.

• The SG amnesty will end for employers on September 7, 2020, which is also the last day they can take advantage of it.
• This only applies to disclosures that are made voluntarily.

In order for companies to qualify for the amnesty, it is necessary for them to disclose any outstanding obligations related to social security taxes to the Tax Commissioner. The next step is to either pay the total amount that is owed to the ATO or negotiate a payment plan with the organisation if the company is unable to pay the total amount. If you agree to a payment plan but do not make the instalments as scheduled, the amnesty will no longer apply to you and you will be required to pay the full amount owed.

Bring Your Documents Up To Date

Having all of the necessary papers in order prior to the end of the fiscal year helps to streamline the process. The following are some examples of records that you are required to keep:

• Receipts for both the selling of goods and their purchase
• Documents pertaining to tax returns, activity statements, and employee contributions to pension and other benefit plans
• GST returns and Business Activity Statements (BAS).

Reduce Occupational Stress With Online Accounting Tools

If you keep your personal and business banking separate, you will find that end-of-year-financial-year (EOFY) and BAS (business activity statement) time are much less stressful. You will be able to record all of your business expenses in a single location thanks to this, and you won't run the danger of mistakenly claiming a deduction for a transaction that has nothing to do with your company. Managing the cash flow of your company is another benefit of maintaining a separate bank account for your company.

If you are registered for online banking, you may have access to tools that may help you with day-to-day bookkeeping as well as gathering information for your tax return. These resources could be found in your online banking account. For instance, some online business banking provide the following:

• Third-party access to bank accounts – featuring a "see only" option, which will allow you to share details on your cash flow with your bookkeeper or accountant.
• Bank feeds that can connect the bank accounts you use for your business to the accounting software you use for your small business (such as MYOB, QuickBooks and Xero)
• An online invoicing tool connected to qualified transaction accounts can provide assistance with the reconciliation of invoices as well as the compilation of financial statements and tax filings.

All of these online banking services help prepare BAS and tax returns while saving time and streamlining administrative tasks.

Take Control of Your Deductions

It makes sound financial sense to verify that you are able to take the appropriate deductions for your expenditures; therefore, it is essential to find out what kinds of things you are eligible to claim. It is possible that you would benefit from participating in the well-known quick asset write-off programme that the federal government offers to small enterprises. As a direct result of the COVID-19 issue, the initiative's threshold has been increased from $30,000 worth of asset purchases to $150,000 for the 2019/2020 financial year. This change will take effect on April 1, 2019.

As a result, now is the time to evaluate whether or not you will require new office equipment in the year to come, as well as whether or not the equipment you now have needs to be serviced or replaced. It is important to keep in mind that these assets need to be installed and available for use before the end of the year 2020, and that assets costing between $30,000 and $150,000 are only eligible if they were ready for use between the 12th of March 2020 and the 31st of December 2020.

If you prepay certain expenses for a period of 12 months or fewer, such as professional subscriptions, rent, wages, insurance, or utilities, you may be eligible for additional deductions. Visit the website of the ATO and conduct a search for the phrase "Deductions for prepaid expenses" to obtain additional details regarding the categories of prepaid expenses that qualify for tax breaks.

If you’re an eligible agribusiness owner, you can take advantage of Farm Management Deposits, which can help you manage your tax position in years of excellent output as you only pay tax when you draw on those money deposited.

Examine Other COVID-19 Relief Options And Their Effects

The COVID-19 scenario is changeable, and government measures such as JobKeeper Payment may effect your EOFY tax situation. For the most recent information, see the ATO's COVID-19 help for businesses website.

Regarding the COVID-19 business relief's effects on taxes and superannuation, you might also want to consult a professional.

It Is Now Mandatory For All Employers To Use Single Touch Payroll

Beginning on July 1, 2019, it will be mandatory for all businesses to utilise a system called Single Touch Payroll (STP). Salary and wage information, as well as PAYG withholding and superannuation payments, are all reported directly to the ATO using STP.

Since the first of July in 2018, businesses that employ twenty or more people have been required to use STP. Please be aware, notwithstanding this, that the ATO has granted a modest degree of leeway to firms with fewer than 50 employees for a predetermined amount of time.

Microemployers have access to a variety of payroll software alternatives, some of which are even available for free (1 to 4 employees). The ATO has also said that businesses with 20 employees or less can first lodge STP in a quarterly BAS lodged by a registered Tax Agent.

If You Don't Fulfil Your Tax Obligations, You Can't Claim Tax Deductions

From the 1st of July 2019, taxpayers will no longer be allowed to claim a tax deduction for the following types of payments if they have not fulfilled their PAYG withholding and reporting obligations to the ATO:

• compensation received by an employee in the form of salary, wages, commissions, bonuses, or allowances
• of Director’s fees;
• to a person who actively practises religion;
• as part of a labor-hire agreement; or
• manufactured for use in situations in which the supplier does not supply an ABN.

Even if you make an error and voluntarily rectify it before the ATO conducts a review or audit, you may still be eligible for a deduction; however, fines may still apply if you failed to withhold the appropriate amount of tax.

Payments To Contractors

Beginning on the first of July in 2019, enterprises that provide security and investigative services, road freight transport, computer system design, and related services will be required to gather particular information regarding payments made to contractors (individual payments and totals for the year). In addition to this, a Taxable Payments Annual Report is to be submitted to the ATO by the 28th of August in the year 2020.

Businesses in the building and construction business, as well as those in the cleaning and delivery services industries, are required to declare their payments to contractors for the year that ended on June 30, 2019, to the ATO by the deadline of August 28, 2019.

PAYG Payment Reports

On or by July 14, 2019, if you did not use STP for 2019, you must give the PAYG Payment Summary to each of your employees. Any employees who left your employ during the 2019 fiscal year are included in this.

When PAYG Payment Summary Statements are lodged late, the ATO assesses fines. The annual PAYG Payment Summary Statement for the year ending June 30, 2019, must be submitted to the ATO by August 14, 2019, at the latest. However, you can be qualified for an extension if we create your Payment Summary for you and your company solely hires family members (closely held staff).

Fringe Benefits That May Be Reported on Payg Payment Summaries

If you have given your employees fringe benefits worth more than $2,000, you are required to declare the FBT grossed-up amount on their PAYG Payment Summary. This applies only in situations when the total value of the fringe benefits exceeds $2,000. This sum is referred regarded as a "Reportable Fringe Benefit" (RFB) amount, and for this reason, a label is included on the PAYG Payment Summary.

Stocktake

Because the rise or fall in the value of a stock is factored into the calculation of a company's taxable income, businesses that engage in stock trading are typically required to conduct a stocktake at the conclusion of each fiscal year.

You are eligible to utilise the simplified trading stock regulations for your company if its annual aggregated turnover is less than $10 million. In accordance with these regulations, you may decide not to perform a stocktake for tax purposes if the difference between the opening value of your trading stock and a reasonable estimate of its closing value at the end of the income year is less than $5,000. You will need to keep a record of the process you used to assess the value of the trading stock that is currently available.

In the event that you are required to carry out a stocktake, you have the option of selecting one of the following three approaches to determining the value of trade stock:

• Cost price – all costs associated with the stock, such as shipping, customs duties, and, if the stock was manufactured, the cost of labour and materials, in addition to a percentage of the fixed and variable overhead costs of the factory, etc.
• Market selling value – the current market price of the shares that you are required to sell in the ordinary course of business (but not at a reduced value when you are forced to sell it).
• Replacement value – the price of a substantially identical replacement item in a regular market on the very last day of the fiscal year for which income is being calculated.

It is possible to choose a different foundation for each class of stock as well as for individual things that fall under the purview of a given stock class. This is an opportunity to reduce the impact of the trading stock adjustment at the conclusion of the fiscal year. There is no need that you utilise the same way every year; rather, you have the flexibility to select the option that offers the lowest overall tax burden. The most obvious illustration of this phenomenon is when a share of stock can be sold at a price that is lower than its original purchase price due to adverse market conditions or damage that has been sustained by the stock. Even though the loss has not yet been incurred, this should nevertheless result in a deduction being taken.

Resolutions Regarding Trust Distribution

The trustees (or directors of a trustee business) have until the 30th of June, 2019, at the very latest, to carefully study and deliberate on the distributions that they intend to make. It is recommended that all decisions reached by the trustees be reduced to writing and submitted no later than June 30, 2019.

Imagine that there are no valid resolutions in place by the 30th of June in 2019. In such a scenario, there is the possibility that the trust's taxable income will be taxed to either the trustee or a default beneficiary, depending on whether or not the trust deed specifies that the trustee or a default beneficiary will be taxed (in which case the highest marginal rate of tax would normally apply).

Payroll Tax

The payroll tax must be paid by any organisation that operates within Australia and has a payroll that is more than the thresholds set by the individual states.

It is important to keep in mind that, if payroll taxes are applicable, in addition to regular salaries and wages, the following items are typically also included as part of payroll expenses:

• fringe benefits calculated using the taxable value of fringe benefits after they have been grossly inflated;
• all payments made by employers to superannuation funds on behalf of staff members; and
• fees for contractors or subcontractors.

WORKCOVER / WORKSAFE

At the close of each fiscal year, your WorkCover or WorkSafe insurer will send an annual reconciliation to all of the registered employers in your business.

In order to finish your annual reconciliation, you will need to include, in addition to regular salaries and earnings, the following items:

• fringe benefits calculated using their taxable worth rather than grossing them up;
• all payments made by employers to superannuation funds on behalf of staff members; and
• fees for contractors or subcontractors.

Your WorkCover/WorkSafe insurer will provide you a final assessment or a refund after receiving and processing the reconciliation, based on the number of instalments you paid over the year.

Goods And Services Tax (GST)

The Goods and Services Tax (GST) should be reconciled as of the 30th of June, 2019, in order to ascertain whether or not there was an under-payment or over-payment of GST for the 2019 tax year. If there is a discrepancy, it is possible to adjust a subsequent Business Activity Statement (BAS) to rectify the error; however, there are limits imposed on adjustments that can be made in this manner. If there is a discrepancy, it is possible to adjust a subsequent Business Activity Statement (BAS) to rectify the error.

The income that is declared on your BAS and the income that is declared on your tax returns need to be compared and reconciled.