Finish off the financial year
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In this short passage, we will discuss what you may want to do before the financial year end, and how you could close your books properly for the financial year.
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Before the financial year end
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Instant asset write-off deductions
If you want to utilise the $30,000 instant asset write-off (available to small businesses with less than $10 million turnover), you would need to make your purchases before 30 June. This applies to the items like vehicles, tools and business equipment.
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Superannuation contributions
You may want to make your final superannuation contribution payment before 30 June, if possible. You may notice that you can only claim tax deductions for the superannuation payments in the financial year that you have actually made the payments.
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Stock-take
If you keep trading stock for your business, it is always a good practice to conduct a stock-take on 30th June and use the stock-take value for your tax calculation. However, an eligible small business with less than $10 million turnover can choose not to conduct a stock-take, as long as the change of your stock value between the beginning and the end of the financial year is $5,000 or less.
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After the financial year end
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Bank reconciliation
One of the most important year-end tasks is to ensure that you have entered all transactions for the financial year, including sales, purchases, payments, receipts and payroll related transactions. You also need to reconcile all your bank accounts. If you use MYOB or XERO, you may take advantages of their bank feeds features or download your banking transactions and import them into the software. These will significantly speed up your data entry process.
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Payroll
If you have employees (and have not fully implemented Single Touch Payroll), here are few more tasks for you:
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Prepare and give each employee a Payment Summary by 14th July.
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Send the PAYG Payment Summary Statement with a copy of the Payment Summaries to the ATO by 14th August. This could be done with your accounting sofware.
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If you pay $54,166 or more salaries per month, payroll tax may be applicable to you. You would need to comply with the payroll tax requirements.
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If you use MYOB AccountRight to process payroll, you would need to rollover the payroll year before you can process any payroll in the following financial year.
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You should also have your Single Touch Payroll ready to process your payroll for the new financial year.
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Fringe benefits
Fringe benefit tax (FBT) may be applicable to certain benefits you provide to your employees. Normally, vehicle salary packaging is a great way to achieve tax savings. This may arise FBT. As an employer, you would need to ensure that the FBT liability for the year has been reduced to nil by the employee contribution (after-tax sacrifice). Otherwise, you may need to pay FBT. If you are registered for GST, you may need to include the GST on employee contributions in the Business Activity Statement.
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Superannuation
The superannuation guarantee (SG) is currently 9.5% of an employee’s ordinary time earnings. You must pay SG at least four times a year, by the quarterly due dates. The official due date for the quarter April to June is 28th July. However, if you want to claim tax deductions for the superannuation payments, you would need to make the contribution payments before 30 June. If you are a sole trader or a partner of a partnership, you may also claim tax deductions for your own superannuation contributions.
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Review the key information
Finally, you may have to review the profit and loss statement, and the balance sheet for the financial year, the aged payable and receivable reports, and the tax code allocation reports in your MYOB or Xero.
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Provide the information to us for preparing the tax return
There are a number of ways you can provide the information to us. With MYOB AccountRight online, MYOB Essentials, Reckon online and XERO online, you may let us work on your accounts online. If you use MYOB AccountRight desktop versions, you may simply email us the backup file. If the backup file is larger than 10Mb and cannot be emailed, you may let us know. We will sort it out with you. If you use a different accounting system, you may provide us with your profit and loss statement, and balance sheet. We will review the reports and let you know what other documents we may need from you.
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Vincent Wan
CPA, Registered Tax Agent
June 2019