With the end of the financial year only a week away, there are a range of taxation issues that businesses have to consider. It is important that you are aware of these issues and get everything in order before 30 June 2011.
You need to address any ATO tax debt as soon as possible. As we’ve already examined this year, the ATO is getting tougher with the debt policies and is intending to reduce tolerance for those who fail to meet their tax obligations. Businesses commonly accrue a tax debt by failing to pay their activity statements on time, or through mismanagement of financial obligations such as PAYG withholding and superannuation. The ATO have advised that they will only be remitting penalties and interest in exceptional circumstances after 30 June 2011.
For most states, it is compulsory to complete and lodge a payroll tax reconciliation at the end of the financial year. The annual threshold for NSW payroll tax this year is $658,000 so if your total taxable wages (including any wages, remuneration, salary, commissions, bonuses, allowances paid or payable, superannuation and certain contractor payments) exceeds this, you are liable for payroll tax on the amount by which it is exceeded.
Another important aspect of payroll tax to have squared off prior to the end of the financial year is whether or not the grouping provisions apply to your business. This is another topic we have discussed in the past, but it is important to make sure you have correctly assessed this matter as the Office of State Revenue has increased it’s auditing of payroll activity and is easily able to discover unregistered business with wages in excess of the exemption threshold or grouped with other businesses.
Ensure that you have the correct coverage for your employees. All NSW employers must have a workers compensation policy if they pay more than $7500 in wages per year, employ an apprentice or trainee, or are part of a group for insurance premium purposes. The premiums paid are tax deductible, so ensure you are maximising your deductibles. Premiums are calculated on the basis of gross wages, salary, commisions, bonuses, superannuation and certain contractor payments.
Your superannuation contributions must be paid before 30 June in order to be claimed as a deduction in the current tax year. By contributing up to the annual “age-based” limits (25,000 or 50,000 if you are aged 50 or over) you can potentially gain a 30% deduction. It is important to be careful this year, as there are 27 fortnightly pay days instead of the normal 26. Check your payroll system to ensure that you will not exceed the allowable caps.
As a business owner you have many things to organise before 30 June 2011. It is important that you have addressed each of these issues before that time, in order to minimise your stress and chances of making mistakes and having problems with the ATO. With all taxation matters it is imperative that you seek professional advice. Here at The Quinn Group our experienced team of accountants and tax agents can assist you with all of your taxation needs and advise you on what you need to do before the end of financial year. For more information submit an online enquiry or call us on 1300 QUINNS (784 667) or on +61 2 9223 9166 to book an appointment.