With the end of the financial year only a few days away, there are many things that you as a business owner have to consider, and it is important to be aware of these issues and get everything in order before 30 June.
ATO tax debt
Take care of any ATO debt you have as soon as possible. From 1 July 2017, the Government will allow the ATO to disclose to credit reporting bureaus the tax debt information of businesses that have not effectively engaged with the ATO to manage these debts. This may affect the business’s ability to acquire finances. The measure will initially only apply to businesses with Australian Business Numbers (ABN) and tax debt of more than $10,000 that is at least 90 days overdue and have not made arrangements with the ATO.
Consider whether you may be over the threshold for payroll tax
Payroll tax is applied to a business’s New South Wales (NSW) taxable wages that exceed the payroll tax threshold. The threshold for 2017 financial year is $750 000 and payroll tax is payable at a rate of 5.45% on the balance over the threshold.
The term ‘wages’ is widely defined in the NSW Payroll Tax Act 2007 (the Act) and includes all forms of direct and indirect reward for work. It is not restricted to wages and salaries and includes other payments such as fringe benefits, superannuation, director’s fees and all contractors’ payments unless at least one of seven exemptions applies
Buy a new business asset
The Government has extended the accelerated depreciation until 30 June 2018. This measure allows small businesses with an aggregated annual turnover of less than $10 million to immediately deduct each business asset that costs less than $20,000.
Review whether all of your relevant motor vehicles have valid log books
A company or trust can generally claim expenses for a motor vehicle owned or leased by your company or trust as long as the expenses are incurred as part of the everyday running of the business.
You may choose to claim deductions for car expenses using the logbook method. In this case you need to a keep a logbook to calculate the business use percentage; odometer readings and written evidence for all car expense (except for fuel and oil costs).
Your logbook is valid for five years. The logbook must cover at least 12 continuous weeks. You will be able to use this method to claim motor vehicle expenses in 2017 financial year if you started the logbook records before the end of the income year.
Ensure shareholder loans comply with Division 7A
A payment or other benefit provided by a private company to a shareholder or their associate can be treated as a dividend for income tax purposes under Division 7A even if the participants treat it as some other form of transaction such as a loan, advance, gift or writing off a debt.
A payment or benefit that is potentially subject to Division 7A isn’t treated as a dividend if it’s repaid or converted into a Division 7A complying loan by the company’s lodgement day for the income year in which the payment or benefit occurs.
Trust Distribution minutes
The trustee of a trust is responsible for managing the trust’s tax affairs, including lodging trust tax returns and paying tax liabilities arising from assessments made to them.
If a trustee makes beneficiaries entitled to trust income for an income year by way of a resolution, it will only be effective for determining who is assessed on the trust’s net (taxable) income if it is made by the end of the income year (30 June). Sometimes a trust deed will require a resolution to be made before the end of the income year.
As a business owner, you will have many things to organise before 30 June 2017. Here at The Quinn Group, our experienced team of Tax Accountants and Tax Lawyers can assist you with all of your accounting and taxation matters. For more information submit an online enquiry or call us on 1300 784 667 to book an appointment.