The end of the financial year is here. Have you completed a final check on the key end of financial year 2021-22 business ‘To dos’? To finalise this financial year (ending 30th June 2022), let’s look at key items to check off.
1. Purchases and improvements
By collating records of asset purchases or expenditure on improvements you can calculate:
- depreciation expense claims and
- capital gains tax if applicable.
EOFY sales are a great time to purchase a variety of assets for your business. To claim tax deductions, don’t forget to keep all receipts for purchases made before June 30.
Due to the impact of Covid, the ATO is continuing to offer part flexibility in claiming tax deductions. Check the ATO for potential deductions you can claim. This could include claims for:
- Instant Asset Write Off (IAWO) or Temporary Full Expensing (TFE),
- Loss carry back
- Accelerated depreciation and others
Australian businesses with up to $5 billion in annual turnover have extended opportunities. By purchasing business assets and having them ready and installed for use by June 30, 2023, you can claim tax deductions. There is no cap on the value of the new assets that can be claimed. For further assistance contact us.
2. Review debtors and creditors
A review of the account receivables (debtors) will show you how much money is owed to the business. It will also indicate how long this money has been owed. You can identify ‘bad debtors’ and the ‘bad debts’ can be recorded accordingly.
You will also need to review any monies owing to creditors. The information on your debtors and creditors will appear on your income statement and consequently your income tax.
3. Pay Superannuation Guarantee (SG)
Payment of the SG is not due until 28 July 2022. However by paying before June 30th, you can claim a tax deduction in this financial year. Contact us for further advice as to what is best for your business budget.
4. End of financial year stocktake
A stocktake is the process of counting and checking all products, goods, or inventory in a business to verify existing records. By completing the stocktake as soon as possible to the end of each income year you will have information for business and tax purposes.
For tax purposes
An increase in stock’s value is considered as assessable income. A decrease in stock value is an allowable deduction. This information makes the stocktake an important activity for completion of your tax return.
For business purposes
Your stocktake will provide insight into your business. This insight will help you forward plan your supply and purchasing requirements. Completing your stocktake involves physically counting the stock. Stock is valued using one of the following three methods for different items of stock.
- Cost price method,
- market selling method, and
- replacement value method.
The closing stock for the end of one income year automatically becomes opening stock for the next income year. If your business is entitled to GST credits, GST needs to be excluded when calculating stock’s value. Need to know how this applies to your business? Then contact us.
5. STP Phase 2 reporting – end of year finalisation
The ATO provides guidelines for STP reporting requirements. Employers must make a finalisation declaration by 14 July each year. By reporting and finalising your employees’ information through STP you do not have to:
- provide payment summaries to your employees or
- lodge a payment summary annual report.
All your STP information must be correct before you make a finalisation declaration.
If you don’t finalise by this date, you need to as soon as possible. This is so your employees can access their information to complete their tax returns. If you need more time you will have to apply for a deferral. As a registered tax agent we can lodge a deferral on your behalf. Contact us.
Dates for finalisation will also vary depending on the types of employees you have.
For employers with:
- 20 or more employees, closely held employees e.g. family members should be reported with arms-length employees each pay day. The finalisation due date for closely held payees is 30th September each year.
- 19 or fewer employees who have closely held employees, the due date is the payee’s income tax return due date.
- a mix of closely held and arms length employees, closely held employees by 30th September and all other employees 14th July.
6. Covid Support payments
The treatment of the Covid support grants for tax purposes will vary depending on circumstances. Whether or not the employee worked while receiving job keeper will have a direct effect on the treatment of Job Keeper grants.
For example, if the employee worked while receiving job keeper, the grant is taxable. An employee who worked while receiving job keeper will also receive superannuation. If the employee
didn’t work, they won’t receive super.
If your business is on the list of approved industries the government is still supplying rebates and grants. This is intended to assist businesses kick-start their operations. The Service NSW Alfresco Restart Rebate is just one example.
Additional End of Financial Year 2021-22 Business ‘To dos’
There may be other End of Financial Year 2021-22 Business ‘To dos’ which are applicable to your industry and your business. If your require assistance contact us today.
Other end/start of financial year considerations
- New Financial Year 2022-23 changes, and
- Review of your business to achieve maximum growth and reward.
Checkout Powell Enterprises website’s news page for more.